Open interest in both Class III and Class IV milk contracts on the Chicago Mercantile Exchange have been setting new highs this past week. That’s good news as an increase in open interest means more people are using the tools to protect their milk price and that, in turn, improves the liquidity of the market.

From February 9 to February 21 – for eight consecutive trading sessions – open interest in the Class III milk futures contract rose from 9,741 contract positions to 10,669 contract positions. Each day, the market set a new high for open interest. During that same time, open interest in Class IV milk futures contracts also hit a new high of 2,061 contact positions.

Open interest is the number of futures and options contracts outstanding at the close of trading each day. The open interest record in Class III milk represents more than 2 billion pounds of milk.

Class III milk is used to manufacture cheese and the futures and options contract began trading in January 1996. Class IV milk is used to manufacture butter and nonfat dry milk. Class IV futures and options contracts began trading on the CME in July 2000.

Source: CME news release