Wednesday, December 15, 2010
(click on image to enlarge)
We do live in interesting times. Today, the Bureau of Labor Statistics (BLS) released Consumer Price data through November 2010. Retail price of Cheddar cheese rose in November 2010 while the Cheddar price on the CME fell. The CME Cheddar price determines both wholesale cheese prices and dairy farm milk price.
In November, the spread between CME and retail was $3.54.
Meanwhile on the CME the second highest amount of cheese was traded - a total of 45 loads. All trades were based on bids. Five players placed bids. Jacoby bought the most. All loads were sold by Jerome.
If all these players needed cheese why did the price not go up? The price fell by 1 1/4 cents to $1.3225. One also would have to assume Jacoby could not find Jerome's number so the cheese could be bought off the exchange without having to pay the CME fee.
Fonterra's GlobalDairy Trade auction prices all rose today. There are serious concerns about the global dairy supply.
Dairy Market News lists Oceania Cheddar (Dec 9, 2010) at $1.905, which is the world price.