And the butter and milk there are still quoted

How avoid that the price of milk paid to European farmers will be dictated by world prices of butter and milk powder, courses very volatile and closely related to the situation in New Zealand One of the important avenues explored by Mariann Fischer Boel, EU Agriculture Commissioner, would be to create a European milk market. The France already calls for the adoption of this instrument, which allows to "cover" to price changes.

Before rendering its verdict, the Commission wants to know if such a system would facilitate "the transparency of prices in the long term."In principle, contracts are consistent with this requirement. "Emergence of a derived market mark always a need for protection against fluctuations in prices", and Delphine Lautier and write Yves Simon, professors at Paris Dauphine, in their latest book devoted to this complex universe (1).

Is Nyse Euronext that say the opposite. Transatlantic market company expects to launch in the first half of 2010 financial derivatives on skimmed milk powder, whey powder and butter on the Liffe London place for negotiation of futures contracts. These contracts are planned to be appropriate physical delivery.

In the United States, butter and milk were among the first products for which futures contracts were ranked at the end of the 19th century. The stock exchange trade in Chicago, the Butter and Egg Board, which was established in 1898, is in is responsible for early.

Over the decades, the place reinforced cohabiting with the Chicago Board of Trade (CBoT), more specialized in cereals, to become the Bourse de commerce the most powerful in the world, CME Group. Today, the two markets of Chicago came together under the same name. And the butter and milk there are still quoted.

Not a panacea

However, contracts on butter experienced difficult times. In 1982, CME has decided to stop them scoring, or negotiated volumes. Reintroduced thereafter, they are always struggling to impose.

The fate of the milk was different. The operators have not shifted its derivatives. Today, they appear very respectable treated volumes. In August, more than 300 contracts (200,000 pounds each) for delivery in December of the milk used by producers of cheddar cheese are exchanged in Chicago. About half of us production of milk through the Chicago futures market.

It is thus hardly surprising that Bruno Le Maire, French Agriculture Minister, has decided to make before mid-October in the United States to study the dairy sector. It is not certain however that it to reach definitive conclusions about the ability of the derivatives of smooth long-term prices.

Away, like other raw materials, by the global credit crisis, between mid-August 2008 and early January 2009, the price of the contract on milk for the cheese has indeed unscrewed by 35. So, the situation worsened for producers, at the end of the month of July, the U.S. Department of Agriculture was prepared to purchase contracts to support the course.

At the same time, the Obama administration decided to grant a temporary increase of 15 of the price paid for milk powder and 16 of that for the manufacture of cheese. A sign that the derivatives markets are not a panacea, especially when financial speculation steals them.