(click on image to enlarge)
In 1996, University of Wisconsin released an import report on cheese trading at the "National Cheese Exchange" in Green Bay, Wisconsin:
http://www.aae.wisc.edu/pubs/misc/docs/cheese.pdf
Just over a year later the traders fled to the arms of the CME where their trading could be more secretive.
USDA then devised the NASS survey for dairy pricing as a smoke screen to hide the fact that the same factors were in charge.
As can be seen in the above graph the only difference between CME and NASS is a few days. That is because the plant uses CME price to quote to a customer and NASS surveys the product when it goes out the door - hence the delay.
Without the CME there would be no NASS.
In 1998 another report was released detailing the benefits of the cash cheese market:
http://www.aae.wisc.edu/fsrg/publications/Archived/wp-116.pdf
I have a theory about the collapse of the CME cheese price; it is that Secretary Vilsack indicated to someone that he would not raise the support price. I wonder what his schedule was prior to the price drop.
ReplyDeleteHe actually said that to raise the support price would be at the expense of other agricultural products.
ReplyDelete