electronic trading
September 27, 2016

Dairy Trading Goes Electronic

 |  By: Anna-Lisa Laca

Today, the CME Group in Chicago announced news some in the industry say they were anxiously waiting to hear.

Beginning in December with Nonfat Dry Milk, CME is transitioning Dairy Spot Call, for daily price discovery in physical dairy markets, to an electronic-based transaction auction. Cheese and butter products will also transition to the new system in the first quarter of 2017, CME officials say.

This is the right move for CME customers, according to group agriculture products lead Tim Andriesen.

“We believe this will further enhance the transparency of spot dairy prices, while expanding access to a broader set of commercial customers, brokers and other physical market participants,” he says.

Dairy market analysts have been waiting anxiously for this day for quite some time.

“Many in the industry are really pleased that this is finally happening because some feel and perceive that there has been some manipulation during that spot call on the floor,” says Naomi Blohm a market analyst with Stewart-Peterson.

With physical bidding, traders can tell when someone is going to offer or bid, or even if anyone is interested in buying or selling making it easy to push the market around.

“Going electronic will make it harder to do that,” she says.

The dairy markets are some of the last of the pit trades to transition to electronic trading.