Class III Milk

Discussion in 'Ag Futures' started by traderTX, Dec 17, 2008.

  1. just curious if anybody else out there trades this contract. I've dabbled in the electronic before...very similar to the pork bellies volume wise..but the spreads aren't just ridiculous. Just kind of thought of it again today when the DFA verdict came down from the CFTC today.

    So..am I the only one? Also, price projections?? I personally think we'll see $11 before we start a significant turn-around.
     
  2. caroy

    caroy

    I've traded some milk options before. The b/a spreads are terrible. An interesting market though.
     
  3. MGJ

    MGJ

    Yep, I trade Class III Fluid Milk futures. One of my systems shorted Dec-08 milk on 04-Sep-2008 and is still in the trade today, 20-Dec-2008. (I rolled the position from the Z8 to the H9 contract on 11/24).

    I find that longer term systems whose average profit per trade is more than 5 or 10 ATR's, are affected less by wide intraday bid-ask spreads. Even if you get "hosed" for 0.25 ATR's of slippage on entry and on exit, it doesn't turn a profit into a loss.
     
  4. Attorney Advertising

    Please contact William M. Sweetnam, Sweetnam LLC, 10 S. La Salle St., Ste 3500, Chicago, IL 60603 (312) 346-5100 wms@sweetnamllc.com if you purchase Class III Milk Futures anytime since April, 2004.



    DFA, a dairy marketing co-operative in Kansas City, Missouri, and its former chief executive Gary Hanman and former chief financial officer Gerald Bos will pay the penalty for attempting to manipulate the Class III milk futures contract and for exceeding speculative position limits in the contract, the Commodity Futures Trading Commission said.

    Hanman and Bos are barred from trading futures for five years and the DFA is barred from speculative trading for two years, the CFTC said.

    Two former officials of a DFA subsidiary, Frank Otis and Glenn Millar, will pay $150,000 for helping DFA exceed position limits, the CFTC said.

    CFTC said DFA, Hanman and Bos tried to manipulate the price of Class III milk futures contracts on the Chicago Mercantile Exchange for June, July and August by buying block cheddar cheese on the exchange's spot call market between May 21 to June 23, 2004.

    Class III milk is used to make cheese.

    http://www.flex-news-food.com/pages...iry-co-op-fined-manipulation-scheme-cftc.html
     
  5. I notice divergence in the milk futures price graph series.

    While milk may seem a minor commodity it is used in many ways and in many products. Cheese is made from milk and used in many food products.
     
  6. anybody seriously trade milk? I mean somebody that really knows their shit on this market, not somebody who has traded milk a few times before. I knew there used to be a milk options local on ET but haven't seen him post lately.

    Im interested in this market but know literally nothing about it.

    Thanks

    YT
     
  7. MGJ

    MGJ

  8. Youngtrader,

    I trade it quite often, actually used to do some hedging work for a dairy here in Texas before the CWT bought them out. Milk options used to be the place to be in the Class III market, not so much anymore imo...as there is decent volume (for this mkt anyway) on the screen these days. Very "trendy" market, very "technical" as well. Good market to trade from a technical standpoint, also easy to watch fundamentals on....mostly just keep an eye on the block and barrel trade and watch the month to month spreads (calculation, not traded spreads, as spreads rarely trade). Easy to leg into spreads if thats your game....PM me if you want any more in-depth stuff.