CME adds cheese futures and options
November 18, 2019 By Nicole Heslip Filed Under: Dairy, News
Starting in January pending regulatory review, the CME Group will launch Block cheese futures and options.
The new futures and options contracts will be cash-settled
to the monthly average price for 40-lb. block cheddar cheese as reported by the
USDA’s National Dairy Products Sales Report (NDPSR) with each contract
representing the equivalent of 20,000 pounds of block cheddar cheese and the
tick size of $0.001 per pound.
A progressively volatile relationship between block and
barrel cheese has led to an increase in basis risk for a large portion of the
hedging community and the CME Group says it has called into question the hedge
effectiveness of their current offering.
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