The Chicago Mercantile Exchange has offered a variety of cash-settled dairy futures products since 1996. At present, these products consist of Class III and Class IV milk futures and Nonfat Dry milk futures. The CME also trades a deliverable butter futures contract. In addition, CME provides the location for a spot call (cash) dairy market where Cheese, Butter, and Nonfat Dry Milk are traded.
Class III milk futures have been trading at CME since 1996 in various forms. CME has refined its futures contracts over time to keep up with the ever-changing government price support program for milk. Cash settlement was originally based on the Minnesota-Wisconsin (MW) price, then the Basic Formula Price (BFP), and currently the Class III milk price. Class III milk is also known by the industry as "cheese milk," the milk used to produce American cheese. Class IV milk futures began trading in 2000 to complement pricing system. Class IV milk is used to produce butter and nonfat dry milk.
All of CME's dairy futures products, except butter, are cash-settled to the National Agricultural Statistics Service (NASS) monthly price. Class prices are based on formulas calculated by United States Department of Agriculture (USDA). Monthly government numbers used to settle the Class III and IV milk futures are released on the Friday before the 5th of the following month. If the 5th falls on Friday, data is then published on that Friday. Monthly data can be found on the USDA website.
Class III Milk futures, Chicago Mercantile Exchange, trade under the symbol DA. The contract size is 200,000 lbs of Grade A cow's milk. The contract trades in ticks of $.01 per cwt., worth $20 per contract.
The trading hours are Sunday through Thursday, 6:00 p.m. U.S. ET until 5:00 p.m. U.S. ET the following day, closing on Friday at 2:55 p.m. U.S. ET.
There are milk futures contracts with expirations in all 12 calendar months, January through December.