A Daily Cheese Auction Is Going Electronic

More than 80% of the wholesale cheese transactions in the U.S. are priced off the CME spot cheddar price, said Dave Kurzawski, a senior dairy broker at INTL FCStone Inc.

Other types of cheese are typically bought and sold at a premium or discount to cheddar. For instance, a dairy-plant operator might agree to sell mozzarella for 10 cents a pound above the average price of CME spot cheddar from the previous week.

“Cheddar is kind of the lowest common denominator of cheeses,” Mr. Kurzawski said.

The number of open-outcry trading floors has dwindled amid the inexorable shift to electronic markets. In December, CME shut down the trading floor of the New York Mercantile Exchange in Manhattan, the longtime home of pits for oil and gold futures, following a long decline in open-outcry volumes.

At the spot cheese auction on Thursday, some 20 brokers barked and haggled, phones pressed to their ears as they relayed orders from customers such as dairy plants and food processors.

Factors that could affect the price include demand from food processors for cheese, as well as the cost of milk.

Cheese at the auction is traded in both barrels and blocks at different prices. Both have fallen this year. A barrel of cheddar, which is used primarily for processing, rose 2.2% to $1.37 a pound on Friday but was down 14% for the year. A block of cheddar, used for cutting, fell 0.3% to $1.54 a pound, down 7% for the year so far.

Pete Turk, a co-owner of Rice Dairy LLC who has been a broker at the cheese auction since 2005, said that going electronic would deprive the market of the emotional buzz that comes with face-to-face trading. “You can’t feel a screen,” he said on the sidelines of the auction on Thursday. “People like to see and feel that emotion to understand what’s going on.”

The cheese auction traces its history back to the founding of the Wisconsin Cheese Exchange in 1918. Later renamed the National Cheese Exchange, it was based for decades in Green Bay, Wis. In 1997, it closed down, and the market shifted to Chicago.

Rumors of market manipulation tarnished the reputation of the National Cheese Exchange, with dairy farmers accusing Kraft Foods Inc. and other big food companies of using it to keep prices artificially low. Multiple lawsuits filed by farmers against Kraft in the late 1990s were all eventually thrown out, and regulators never filed charges against the food company, which denied the accusations.

Moving the market to Chicago put the cheese auction under CME’s surveillance and regulation, but that didn’t end concerns about possible manipulation. In 2008, the Dairy Farmers of America Inc. and two of its former executives paid $12 million to settle allegations by the Commodity Futures Trading Commission that they had attempted to manipulate the price of milk futures by repeatedly buying cheddar in the auction. DFA, a nationwide farmers’ cooperative, neither admitted nor denied wrongdoing.

>>151701
Pepper jack is bomb as fuck on a sandwich with bacon, avocado and tomato.

What's your favorite cheese OP?

>>151715
I like feta cheese
I also like aged cheddar and cottage cheese.

>>151717
Damn, never was able to enjoy cottage cheese, my dad made me eat it when I was a kid, the plain, soupy kind that has the texture of vomit.

At my first job(pizza place) my boss once told me that he ate a black girls pussy that smelled like feta cheese. He refused to handle the feta and I always had to unpackage and prepare it while he stood 10ft away holding his nose.

Cheddar deserves more respect

>>151719
Most cottage cheese brands suck this is the only one I buy.
http://www.friendshipdairies.com

>>151715
My nigga

>Despite the relatively small volumes, the daily spot price from the auction is widely used in the U.S. cheese business.
Isn't this evidence of illegal trade practice and trust building?
>after being held in a traditional open-outcry format for decades.
for decades?
Oh, right. It's only illegal when poor people break the law. Fuck this shit. Eat the Rich and put their parts on auction at the CME.