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Butter Cash-Settled February 2014 (BDG14)

157.500sunch (unch) 5:42P EDT (CME)
Commodity Price Quote as of Tuesday, May 21st, 2013 View Help

Contract Specifications

Symbol BD
Name Butter Cash-Settled (CB)
Exchange CME
Trading Months January, February, March, April, May, June, July, August, September, October, November, December (F, G, H, J, K, M, N, Q, U, V, X, Z)
Trading Unit 20,000 pounds
Tick Size 0.025 cents per pound ($5.00 per contract)
Daily Limit 5 cents per pound ($1,000 per contract)
Trading Hours 5:00p.m. - 4:00p.m. Sun-Thur, 5:00pm - 1:55p.m. Fri CST
Last Trading Day Business day prior to USDA Butter Price announcement
Value of one futures unit $200
Value of one options unit $200

CRB Yearbook Description

Butter is a dairy product produced by churning the fat from milk, usually cow's milk, until it solidifies. In some parts of the world, butter is also made from the milk of goats, sheep, and even horses. Butter has been in use since at least 2,000 BC. Today butter is used principally as a food item, but in ancient times it was used more as an ointment, medicine, or illuminating oil. Butter was first churned in skin pouches thrown back and forth over the backs of trotting horses.

It takes about 10 quarts of milk to produce 1 pound of butter. The manufacture of butter is the third largest use of milk in the U.S. California is generally the largest producing state, followed closely by Wisconsin, with Washington as a distant third. Commercially finished butter is comprised of milk fat (80% to 85%), water (12% to 16%), and salt (about 2%). Although the price of butter is highly correlated with the price of milk, it also has its own supply and demand dynamics.

The consumption of butter has dropped in recent decades because pure butter has a high level of animal fat and cholesterol that have been linked to obesity and heart disease. The primary substitute for butter is margarine, which is produced from vegetable oil rather than milk fat. U.S. per capita consumption of margarine has risen from 2.6 pounds in 1930 to recent levels near 8.3 pounds, much higher than U.S. butter consumption.

Futures on butter are traded at the Chicago Mercantile Exchange (CME). The CME's butter futures contract calls for the delivery of 40,000 pounds of Grade AA butter and is priced in cents per pound.

Prices - The average monthly price of butter at the Chicago Mercantile Exchange in 2011 rose +13.5% yr/yr to 196.18 cents/pound, a new record high.

Supply - World production of butter in 2012 is expected to rise +2.2% yr/yr to 8.724 million metric tons, a new record high. The world's largest producers of butter will be India with 51.6% of the world production in 2012, the European Union with 23.4%, the United States with 9.3%, New Zealand with 5.6%, and Russia with 2.4%. Production of creamery butter by U.S. factories in 2011 rose +15.6% yr/yr to 1.805 billion pounds. The record high was 1.872 billion pounds in 1941.

Demand - Total commercial use of creamery butter in the U.S rose by +12.3% yr/yr to 1.829 million pounds in 2011, a new record high. That is about one-third higher that the commercial use of butter back in the 1950's. Cold storage stocks of creamery butter in the U.S. on December 1, 2011 rose +33.7% yr/yr to 93.523 million pounds.

Trade - World imports of butter in 2011 rose +6.1% yr/yr to 311,000 metric tons. U.S. imports of butter in 2011 fell -10.0% yr/yr to 9,000 metric tons. World exports of butter in 2011 rose +5.7% yr/yr to 783,000 metric tons. U.S exports in 2011 rose +13.6% yr/yr to 67,000 metric tons, down from the 1993 record high of 145,000 metric tons.

Articles from the Commodity Research Bureau (CRB) Commodity Yearbook. The single most comprehensive source of commodity and futures market information available, the Yearbook is the book of record of the Commodity Research Bureau, which is, in turn, the organization of record for the commodity industry itself. Its sources - reports from governments, private industries, and trade and industrial associations - are authoritative, and its historical scope is second to none. Additional information can be found at www.crbyearbook.com.
More commodity data from Commodity Research Bureau.