The cash-settled contracts will be available on CME Globex, the exchange’s electronic trading platform, with trading scheduled to begin 20 June 2010, for trade date of 21 June.
“This contract was requested by our customers such as manufacturers and processors of cheese to better fit the needs of their risk profile,” said CME group MD of agricultural commodities, Tim Andriesen. “Many of these customers already participate in our Class III Milk and Dry Whey futures and options markets. The new cheese contracts will enable them to directly lock in future prices for cheese.”
Cheese is made from Class III milk. Dry whey is a byproduct of processing the milk into cheese. Manufacturers, processors, food companies and others have used the Class III contract to meet their hedging needs since 1996 and the Dry Whey futures contract launched in 2007. The Cheese futures will complete the ‘dairy crush’ with which the original commodity as well as its product and byproducts can be hedged.
The new contracts will be listed monthly, with each contract representing the equivalent of 20,000 pounds of cheese and the tick size of $0.001 a pound.
Meanwhile, the launch date of International Skimmed Milk Powder (ISMP) futures and options has been postponed to allow the marketplace further time to prepare for trading these unique new products. A new launch date will be announced shortly.
International Skimmed Milk Powder futures and options (ISM) are the first international dairy risk management tools available to the industry. The futures contact is based on a physically delivered product based on the international standard for dry milk and represents a market size estimated at $6.7bn US dollars.
Source: CME Group
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