CME BFP Milk Futures Surpass 5,000 In Open Interest

Open interest in futures on Basic Formula Price (BFP) milk traded on the Chicago Mercantile Exchange (CME) hit a record 5,207 contracts March 2, the highest total ever reached by any U.S. exchange. In addition, volume in futures on BFP milk rose to a record 724 contracts on March 1. In terms of open interest, BFP milk is the second fastest growing agricultural product since the introduction of live cattle futures in 1964. "As the industry moves closer to the removal of government price supports in the year 2000, the increase in volume and open interest in BFP milk futures indicates that co-ops and producers are turning to our markets to hedge their risk," said Bob Prosi, Co-chairman of the Dairy Products Committee. Each BFP milk futures contract represents 200,000 pounds of milk, or four tanker loads. The open interest figure equates to over 1 billion pounds of milk. The CME's dairy complex is the world's largest marketplace for dairy products and trades more tonnage of milk on its cash, futures and options markets than any other exchange. The CME began trading BFP milk futures and options in May 1997. Also traded in the dairy complex are futures and options on butter, cheddar cheese, nonfat dry milk and whey - as well as a mini-option on BFP milk, sized at 50,000 pounds or one-quarter the size of the larger contract.