Why Dairy Futures Seem Irrational

Why Dairy Futures Seem Irrational

From The Milk Check by T.C. Jacoby & Co. - Dairy Traders

February 17, 2026 · 25 min

About this episode

The episode discusses the chaotic nature of dairy futures and the factors contributing to their seemingly irrational behavior.

Dairy futures have been anything but calm. In just three weeks, prices across Class III, Class IV, cheese, butter and nonfat have surged, then whipped back and forth enough to exhaust even full-time market watchers. In this episode of The Milk Check, Ted Jacoby and the T.C. Jacoby & Co. team break down why dairy futures can look irrational, even when the underlying fundamentals haven’t changed much. What’s driving the chaos (beyond fundamentals) Short squeezes 101: how a crowded short can turn into a domino effect Flow first, narrative second: why the buying often hits before the story shows up Realized vs. implied volatility: what the market did vs. what the options market is pricing in Why nonfat may be the center of the storm: the team debates whether this is a true regime change Why butter and cheese moved too: how spread relationships and algorithmic trading can drag correlated dairy contracts higher Spot market feedback loops: how NDPSR-linked spot markets can amplify futures moves (tail-wagging-the-dog dynamics). What usually happens next: why squeezes rarely park at the top Plus: stick around for a director’s cut featuring the unedited, behind-the-scenes debate the…

People in this episode

Host: Ted Jacoby

Topics covered

  • dairy futures
  • market volatility
  • short squeezes
  • trading dynamics
  • price movements
  • algorithmic trading

Keywords

  • dairy futures
  • market chaos
  • short squeezes
  • volatility
  • trading strategies
  • price fluctuations

Mentioned in this episode

Organizations: T.C. Jacoby & Co.

Products: Class III, Class IV, cheese, butter, nonfat

More episodes of The Milk Check

Explore listener stats, chart rankings, contacts and more on the The Milk Check podcast page.