What are milk futures?

Milk futures have been trading at the Chicago Mercantile Exchange (CME) since 1996 in various forms. CME has refined its milk 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 III milk futures (DA) are cash-settled to the National Agricultural Statistics Service (NASS) monthly price, and prices are based on formulas calculated by United States Department of Agriculture (USDA). Milk futures can be traded 6 days per week.

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How to trade milk futures

Class III milk futures contracts are offered through CME on the Globex® trading platform and are available to trade electronically through Schwab.

Monthly government numbers used to settle the Class III milk futures are released on the Friday before the fifth of the following month. If the fifth falls on Friday, data is then published on that Friday. Monthly data can be found on the USDA website. An account approved to trade futures is required in order to trade milk futures.
 

Milk futures contract specifications

Considering trading milk futures? Here are the milk futures contract specifications.

Exchange, Product Name, Product Code Chicago Mercantile Exchange (CME), Class III Milk Futures, DA
Contract Size 200,000 pounds
Minimum Tick Size and Value 0.01/cwt, worth $20.00 per contract.
Trading Times Milk futures trade 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.
Principal Trading Months There are milk futures contracts with expirations in all 12 calendar months, January through December.

With a Schwab futures account, you also get access to advanced trading platforms and education, where you can take advantage of actionable research, real-time milk futures quotes, and other specialized tools. 

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