CME Volume

http://cmegroup.mediaroom.com/index.php?s=43&item=3041

CME Group Volume Averaged 12.2 Million Contracts per Day in June 2010, Up 8 Percent, and 13.5 Million Contracts Per Day in Second Quarter, Up 31 Percent
- Double digit monthly year-over-year growth in equities, foreign exchange, energy and metals
- Second highest quarterly average daily volume ever
- Record quarterly FX average daily volume of 1.0 million contracts, up 82 percent
- Record quarterly energy average daily volume of 1.8 million contracts, up 29 percent
- Record quarter for WTI and refined products, up 52 and 36 percent, respectively

More at link.

No mention of dairy trading. It is too little to take note.

Probably the big players would like it if no one paid attention to the CME

Its Been Hot

http://discover.itsc.uah.edu/amsutemps/execute.csh?amsutemps+001

Seems like not too long ago tomatoes were an iffy plant in this county. This year it has been hot - too hot.

The above link is an interesting interactive site. Enjoy

Important Question

(click on image to enlarge)

There is no doubt dairy farmers need better milk prices. If you get the government out, contrary to some opinion, and this includes the federal orders, the door is open for vertical integration as in chicken and pork.

A government role is necessary to limit the power of bullies. In order for the government to be involved there needs to be a clear and compelling public interest.

Dairy farmers are not the only ones hurting and the hurt started from the same attitude as we have in dairy pricing. See: http://www.economicsecurityindex.org/?p=home

The site is interactive and the graph shown above will change.

So, the question is both simple and broad - what is the public's interest in a healthy dairy system? Only if that question is answered very carefully, will we have a chance in Washington, DC.

Funny Stuff

The Livestock Dairy and Poultry Outlook report just came out. It is available at: http://www.ers.usda.gov/Publications/LDP/2010/07Jul/LDPM193.pdf

On page 20: "The current situation has Class IV prices above Class III prices, a reflection of the tightness in fat availability. Lower fat tests have boosted butter prices and may have helped firm up cheese prices as well. This situation should correct itself early in 2011."

I'm not sure of that. The protein test in the federal orders have been off as well - by a full point.

According to NASS milk production in the first six months of 2009 was 96262
million pounds and in 2010 Jan -June it was 97,076 million pounds - not a full point increase.

Total cheese production was up 1.9%. If you're following this, there is something very wrong with the picture. Last year they were putting considerable magic dust in the cheese vat. Cheese production - everything being equal , which it never is - should have been flat without even more "magic" in the cheese vat.

Supply Tightens

June milk production Numbers have not been out a week and there are abundant signs of short milk supplies. Dairy Market News overview states:

FLUID MILK: Weather conditions are having bigger impacts
on the milk flow across the United States as the summer season
progressed. Production declines are noted across many regions as
well as drops in milk components. Hot, humid conditions in the
Northeast and Middle Atlantic regions are causing significant
production declines and causing milk plants to run on reduced
schedules. Milk production in the Southeast has moderated and
being attributed to increases in heifers in the region offsetting
seasonal declines. Upper Midwest milk output is dropping with
weather conditions the main reason. There is good demand for
surplus milk and offerings are demanding premiums of up to $3
above class usage, unusual at a time when discounts are normally
needed to move milk. Production of milk is trending lower in
California, Arizona, and New Mexico. Declines in the fat and
protein levels of incoming milk are commonly noted. Conditions
are making heat abatement measures necessary, but less effective
as humidity levels increase. Milk supplies in the Northwest,
Idaho, and Utah are seasonally steady and plants are able to
handle the current flow. Bottled milk demand is trending along
summertime patterns. There are areas where retail features are
moving more milk along with some strategies of offering
reduced/skimmed milk pricing to allow bottlers to capture more
cream. Cream markets remain tight and characterized by good
demand and higher multiples.

Those multiples are based on current CME butter price. DMN states multiples as high as 170, which means 170% of the CME butter price per pound of actual fat.

Politics Today

Well, it is big news, the Shirley Sherrod/USDA/Vilsack/Tea Party/ Obama/Fox News.

Here's a link to Vilsack's press meeting: mms://ocbmtcwmp.usda.gov/content/secy/secy072110c.wmv

Key in this whole story is the concept of substantiate - neither side did - it was all about politics.

But, substantiate is closely rooted with substantial. Abraham Lincoln referred to the USDA as "the people's office." I cannot say any ag secretary, from either party, has done much to uphold Lincoln's vision.

Except for the pleasure it would bring to some, I think Vilsack should go. I worry, however, about who might replace him. If people are going to allow their buttons to be pushed what do we all deserve?

Madison Hearing Transcript

http://www.justice.gov/atr/public/workshops/ag2010/wisconsin-agworkshop-transcript.pdf

Out of curiosity, I went to the Bob Cropp testimony which was all about defending big co-ops. Dr.Cropp begins his defense on page 191. He compares the size of co-ops with big retailers.

Then he talks about the over-order premium negotiated by co-ops on page 194, which he says averaged $2.45. I don't think that is right. See: http://www.ams.usda.gov/AMSv1.0/getfile?dDocName=STELPRDC5081678

Here in the Northeast, with high class I use the premium is $1.50. In Wisconsin, with little class I use the premium is $3.52. Where the big co-ops have power there is a small premium. Where there is competition, the premium grows.