CME Group, the world's leading and most diverse derivatives marketplace, today announced February volume averaged 14.7 million contracts per day, up 17 percent from February 2010, and up 19 percent from January 2011. Total volume for February was 279 million contracts, of which 83 percent was traded electronically.
But a more rational view (yes, admittedly, prices can be bid up and down on emotion) is the CME is fairly and generally reflective of supply and demand.
DECEMBER 3, 2010 MADISON, WI (REPORT 48)
BUTTER HIGHLIGHTS: The CME Group AA cash butter price
declined early in the week but recovered late to close at
$1.6100 (-6 cents from last Wednesday, November 24 close).
Churning was more active over the long holiday weekend while
many other cream users were closed. Printing continues to
fill last minute orders from bulk and fresh stocks. Export
interest has improved with the lower prices. Some
manufacturers are looking at increasing butter/butterfat
exports, particularly during the yearend holiday season.
The "new crop" butter production year started December 1,
allowing CME Group cash butter market sale eligibility until
March 1, 2012.
"We've got to do better yet," he said. "The market doesn't care what anybody's cost of production is. The long-run average price will just about equal long-run costs."
Margins keep tightening, and they're likely to tighten further.
More than 150 companies with market caps above $500 million that claim they have free cash flow—really don't!
That's the word from Ken Hackel, who wrote the just-published tome (and I do mean tome): "Security Valuation and Risk Analysis – Assessing Value in Investment Decision Making."
You should care, because free cash flow is the lifeblood of any company looking to grow.
And free cash flow was touted as a plus quite a bit in the recent round of earnings.
Hackel isn’t impressed. "The term 'free cash flow' has almost gotten to be like the old television show 'What's My Line',” he says. “What free cash flow should be defined as is the maximum amount of cash an entity could distribute to its shareholders without impairing its growth rate. Unfortunately, we've gotten quite a bit away from that."
The free cash flow definition most people use is operating cash flow minus capital spending.
But Hackel says that true free cash flow requires a lot more in the way of adjustments—the kind he believes most analysts simply do not do.
Among companies whose cash flow he believes are flashing red:
Kraft [KFT 31.12 0.04 (+0.13%) ], whose revenues missed estimates and which didn’t include a cash flow statement with its earnings release or discuss it on its earnings call. Still, using available information, Hackel believes he was able to analyze the cash flow and say, “Their backs are really against the wall; they have no room for expansion; they do not have financial flexibility."
Kraft disagrees, saying that over the past few years it has made excellent progress improving free cash flow. "In 2010, there are a number of puts and takes in the equation, due to the acquisition of Cadbury. However, on a more normal run-rate basis, we would expect cash flow to be north of about $3.5 billion.”
CME Group to Launch Rainfall Contracts in Nine U.S. Cities
CHICAGO, Oct. 14 /PRNewswire/ -- CME Group, the world's leading and most diverse derivatives marketplace, announced today that it will begin listing and trading rainfall futures, options on futures and binary options beginning October 31 for trade date November 1. The monthly and seasonal contracts will be based on the CME Rainfall Index and will be available March through October. These contracts will be listed with, and subject to, the rules and regulations of CME.
"We see the impact of weather every day in our lives and we know how it can influence regional and local business decisions – whether to raise prices, divert inventory or result in temporarily closures," said Tim Andriesen, CME Group's Managing Director of Agricultural Commodities and Alternative Investments. "A significant number of industries, from agribusiness to recreation, are reliant on good weather, but also are at the mercy of bad weather. Rainfall contracts, in conjunction with our existing suite of weather products, will allow these businesses to manage the resulting risk."
"CME Group's commitment to expand their product offerings in the weather space has enabled our clients to gain access to financial risk mitigation tools previously only available to large, commercial end-users in the over-the-counter market," said Jeff Hodgson, President of Chicago Weather Brokerage. "The rainfall contracts are a viable hedging tool for large agricultural market participants, as well as smaller industries that are equally affected by weather."
The rainfall contract locations include Chicago O'Hare International Airport, Dallas-Fort Worth International Airport, Des Moines International Airport, Detroit Metro Airport, Jacksonville International Airport, Los Angeles Downtown USC Campus, New York LaGuardia Airport, Portland International Airport and Raleigh/Durham International Airport.
The futures and options on futures contracts enable market participants to manage exposure to rainfall. The binary options enable users to manage the ramifications on businesses or other operations if rainfall is more or less than anticipated. Binary options provide the options holder with a fixed dollar payout upon exercise. If the option expires without being exercised, the holder's losses are limited to the amount paid for the binary option.
CME Group's weather product suite offers trading opportunities related to rainfall, temperature, snowfall, frost and hurricanes. The products are based on a range of weather conditions in more than 47 cities in the United States, Europe, Canada, Australia and Asia, with the hurricane products geared to nine U.S. regions. For more information about CME Group weather products, visit http://www.cmegroup.com/weather.
As the world's leading and most diverse derivatives marketplace, CME Group (www.cmegroup.com) is where the world comes to manage risk. CME Group exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate. CME Group brings buyers and sellers together through its CME Globex® electronic trading platform and its trading facilities in New York and Chicago. CME Group also operates CME Clearing, one of the largest central counterparty clearing services in the world, which provides clearing and settlement services for exchange-traded contracts, as well as for over-the-counter derivatives transactions through CME ClearPort®. These products and services ensure that businesses everywhere can substantially mitigate counterparty credit risk in both listed and over-the-counter derivatives markets.
The Globe logo, CME, Chicago Mercantile Exchange, CME Group, Globex, E-mini and CME ClearPort are trademarks of Chicago Mercantile Exchange Inc. CBOT and Chicago Board of Trade are trademarks of the Board of Trade of the City of Chicago. NYMEX and New York Mercantile Exchange are trademarks of New York Mercantile Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc. All other trademarks are the property of their respective owners. Further information about CME Group (Nasdaq: CME) and its products can be found at www.cmegroup.com.
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14550. In order to promote, foster, and encourage the intelligent and orderly marketing of agricultural products through cooperation;to eliminate speculation and waste; to make the distribution of agricultural products between producer and consumer as direct as can be efficiently done; and to stabilize the marketing of agricultural products, this act is passed.
14551. It is here recognized that agriculture is characterized by individual production in contrast to the group or factory system that characterizes other forms of industrial production; and that the ordinary form of corporate organization permits industrial groups to combine for the purpose of group production and the ensuing group marketing; and that the public has an interest in permitting farmers
to bring their industry to the high degree of efficiency and merchandising skill evidenced in the manufacturing industries; and that the public interest urgently needs to prevent the migration from the farm to the city in order to keep up farm production and to preserve the agricultural supply of the nation; and that the public
interest demands that the farmer be encouraged to attain a superior and more direct system of marketing in the substitution of merchandising for the blind, unscientific, and speculative selling of crops.
