Streetwise Professor

August 30, 2012

Blog Blitz

Filed under: Uncategorized — The Professor @ 10:21 am

Apologies for the light posting.  I’ve been immersed in commodities.  That’s not unusual, but the commodities that have submerged me are: Platinum, palladium, and milk and cheese.  I have learned more about the mysteries of milk and cheese pricing and marketing in the past month than you can imagine.*  And as an added bonus, this cheese drill-down gave me an opportunity to learn about wine through show & tell & taste.

I hope to make up for the slow blogging pace of the last week with a blitz of posts today and over the weekend (especially if the remnants of Isaac keep my cooped up indoors on Saturday).  I’ll start with a few short ones, and then some longer pieces that I’d been hoping to get to.

*Although ironically my first exposure to commodity manipulation litigation involved an alleged cheese squeeze in 1987 or 1988 undertaken by Kraft.  That took place on the National Cheese Exchange.  Really.  There was such a thing, in Green Bay, WI.  (The cheese auction has since moved to the CME.)  I have a vague recollection that the WSJ had an article about that that I will try to track down.  Little did I know that would foreshadow a big slice of my professional career 🙂 (I could have said “a block of my professional career”-because, as I now know, cheese is marketed in blocks and barrels.)

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  1. I never knew about the Kraft manipulating cheese prices. I found this in 1996 from the Wall Street Journal:
    Wisconsin blasts Kraft’s cheese-trading activities
    Wall Street Journal [New York, N.Y] 20 Mar 1996: A6.

    Abstract (summary)

    The state of Wisconsin has released a study suggesting that Kraft Foods Inc, a unit of Philip Morris Cos, at times used its power as a major seller on the National Cheese Exchange to have undue influence on the nation’s wholesale cheese prices.

    Full Text

    MADISON, Wis. — The state of Wisconsin is picking a food fight with Kraft Foods Inc., releasing a study suggesting that the No. 1 cheese maker had undue influence on the nation’s wholesale cheese prices.

    The three-year study, conducted jointly by Wisconsin state authorities and two professors at the University of Wisconsin in Madison, tracked the activities of Kraft and other leading traders between 1988 and 1993 on a little-known but important cash exchange called the National Cheese Exchange. Although less than 1% of the nation’s $18 billion cheese market is traded on this weekly exchange, based in Green Bay, Wis., it provides an important benchmark for wholesale cheese prices.

    The study said Kraft, a unit of Philip Morris Cos., at times used its power as a major seller on the exchange to lower cheese prices for its own benefit. As lower prices on the exchange led to lower wholesale cheese prices in general, Kraft, which buys a large amount of bulk cheese from its contractors, was able to save money, the study said.

    Kraft officials said that the cheese exchange accurately reflects the supply and demand of the industry. It said it sold cheese on the exchange when it had excess supply and couldn’t sell the cheese outside the market.

    Comment by Highgamma — August 30, 2012 @ 11:34 am

  2. If the blog postings don’t pick up in frequency, I am going to ask for a refund of my subscription payment.

    Comment by Charles — August 30, 2012 @ 12:18 pm

  3. @Charles. It’s already in the mail!

    The ProfessorComment by The Professor — August 30, 2012 @ 12:33 pm

  4. I often reflect with thanks that Enron was not around in 1840, otherwise there would certainly have been an American Slave Exchange.

    Comment by Green as Grass — August 31, 2012 @ 6:36 am

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