CME to Add Nonfat Dry Milk, Dry Whey

The Chicago Mercantile Exchange (CME) is expanding its dairy trading complex, by adding nonfat dry milk and dry whey futures and options to its lineup of dairy products.

"The dairy industry is turning increasingly to the Chicago Mercantile Exchange to manage the price risk of dairy products," said CME Dairy Products Committee chairman Bob Prosi. "Adding nonfat dry milk and dry whey to our dairy complex, which already includes basic formula price milk, cheddar cheese and butter, will expand the list of milk components whose economic risk can be hedged on the CME."

"We believe the availability of the forthcoming risk management tools will prove useful not only to product manufacturers and their sales representatives, but also to those firms who utilize the products in a wide variety of food products," said Warren Clark, Jr., PhD, CEO of the American Dairy Product Institute. "Members of the American Dairy Products Institute, both processors and sales organizations, have been cooperating with the CME Dairy Products Committee to develop specifications and parameters for futures and options contracts for nonfat dry milk and dry whey."

For both contracts, the specifications call for 44,000 lb of dry product, with contract expirations to be listed in all 12 calendar months. Regular trading hours will begin at 8:30 a.m. for whey and 8:40 a.m. (Chicago time) for nonfat dry milk. Both products will trade until 1:10 p.m. The contracts will cash settle to the USDA weekly weighted average price in the U.S. for the week ending on the last Saturday of the contract month.