Will This Deal Turn Sour?

Moo-ve over traders. Milk money is taking on a new meaning as two commodity exchanges uncap competing milk futures contracts.

The instruments, to be launched today on New York’s Coffee, Sugar & Cocoa Exchange and Jan. 11 on the Chicago Mercantile Exchange, are designed to help dairy farmers, cheese makers and speculators profit from unsteady milk prices as federal price supports erode.

“It’s very difficult for a producer to plan for the future. This should bring some stability to the producer market,” said Thom Wilborn of the National Milk Producers Federation.

For the Merc and the much smaller CSCE, the milk rivalry reflects the intense search by futures exchanges for niche markets to exploit.

The exchanges’ interest in milk futures stems from the volatility of milk prices since 1989,