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An Empirical Analysis of Wholesale Cheese Pricing Practices on the Chicago Mercantile Exchange (CME) Spot Cheese Market

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  • Bolotova, Yuliya V.
  • Novakovic, Andrew M.

Abstract

The CME spot cheese market performs a number of key functions in the United States dairy industry. The CME spot cheese prices are used as reference prices in contract cheese market, and they also influence milk prices at the farm-first-handler level set within a public pricing system, the Federal and State Milk Marketing Orders. The CME spot cheese market performs a critical price-discovery function in the United States dairy industry. This research evaluates the nature of pricing practices used by CME cheese wholesalers during the period of 2000-2014. The analysis focuses on the farm-to-wholesale price transmission process, which reflects the nature of cost pass-through. The empirical evidence presented in the article indicates that pricing strategies of cheese sellers in the analyzed market are consistent with the ones predicted by the profit-maximization models of oligopolistic behavior. The overall empirical evidence may suggest that cheese sellers on the CME spot cheese market used an output (cheese) price stabilization method during the analyzed period of time.

Suggested Citation

  • Bolotova, Yuliya V. & Novakovic, Andrew M., 2015. "An Empirical Analysis of Wholesale Cheese Pricing Practices on the Chicago Mercantile Exchange (CME) Spot Cheese Market," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 18(3), pages 1-18, September.
    • Handle: RePEc:ags:ifaamr:208403
    DOI: 10.22004/ag.econ.208403
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    References listed on IDEAS

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    Cited by:

    1. Tejeda, Hernan A. & Kim, Man-Keun, 2020. "Dynamic price relationships and price discovery among cheese markets," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 24(1), September.
    2. Wang, Zuyi & Tejeda, Hernan & Kim, Man-Keun & Siu, Wai Yan, 2023. "Cheese Price Softening in the U.S.: Determining Effects from Excessive Cheese in the Market," Research on World Agricultural Economy, Nan Yang Academy of Sciences Pte Ltd (NASS), vol. 4(3), July.
    3. Bolotova, Yulia V., 2023. "Market Power in the U.S. Dairy Industry," Applied Economics Teaching Resources (AETR), Agricultural and Applied Economics Association, vol. 5(2), March.
    4. Bolotova Yuliya V., 2024. "Private Supply Management and Market Power in the U.S. Dairy Industry," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 22(1), pages 1-17.
    5. Bolotova, Yuliya, 2020. "The Price Effects of Milk Supply Control in the U.S. Dairy Industry," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304209, Agricultural and Applied Economics Association.

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