The Chicago Butter and Egg Board, founded in 1898, was a spin-off entity of the Chicago Produce Exchange. In the year 1919, it was re-organized as the Chicago Mercantile Exchange (CME). Roots of the Chicago Butter and Egg Board are traceable to the 19th century. Initially, the Chicago Butter and Egg Board traded only two types of contracts,

butter Butter is a dairy product made from the fat and protein components of churned cream. It is a semi-solid emulsion at room temperature, consisting of approximately 80% butterfat. It is used at room temperature as a spread, melted as a condimen ...

and

eggs Humans and human ancestors have scavenged and eaten animal eggs for millions of years. Humans in Southeast Asia had domesticated chickens and harvested their eggs for food by 1,500 BCE. The most widely consumed eggs are those of fowl, especial ...

. Over several decades, it evolved into the CME which traded

futures contract In finance, a futures contract (sometimes called a futures) is a standardized legal contract to buy or sell something at a predetermined price for delivery at a specified time in the future, between parties not yet known to each other. The asset ...

s and options contracts on over 50 products, from pork bellies to

eurodollar Eurodollars are U.S. dollars held in time deposit accounts in banks outside the United States, which thus are not subject to the legal jurisdiction of the U.S. Federal Reserve. Consequently, such deposits are subject to much less regulation than ...

s and stock market indices. The butter and egg markets died out in the 1960s after the production of both commodities had become much less seasonal, which reduced both the price volatility and the need for inter-temporal signals for guiding the disposal of inventories.

Background

The United States was experiencing significant population growth in the late 19th century, but periods of food

scarcity In economics, scarcity "refers to the basic fact of life that there exists only a finite amount of human and nonhuman resources which the best technical knowledge is capable of using to produce only limited maximum amounts of each economic good. ...

continued. Markets were not yet well organized, refrigeration had not been invented and production was still governed by seasonal cycles. Butter was salted and stored for later use. By 1915 the Butter and Egg Board has developed 28 rules for butter grading.

Formation

The Chicago Butter and Egg Board was formed in 1898 out of the Chicago Produce Exchange. Time contracts were only a small part of the Board's activity and early attempts to implement margin rules were controversial. When futures trading rules were finally put in place in 1919 the Board's mandate expanded to include futures trading, eventually giving way to the CME which began trading butter and eggs on December 1, 1919.

References

{{DEFAULTSORT:Chicago Butter And Egg Board Financial services companies established in 1898 Commodity exchanges in the United States 1898 establishments in Illinois History of Chicago Butter Egg organizations American dairy organizations