Editor’s note: This market commentary is provided by Curtis Bosma at HighGround Dairy in Chicago, IL.

Dairy Market Recap: August Class III futures rebound to $20.60

Class III Futures
After the dip seen yesterday, Class III futures rebounded Thursday to settle where they have traded week ago. Contracts settled 2 to 25 cents higher through the end of this year and a penny lower to 9 cents higher in 2015. The August and September contracts made their daily highs (37 and 24 cents, respectively) at the height of the CME spot trade but backed off leading up to the pit-session close. Whey futures rallied in the front months, settling at 63.0500 cents in September (UP 2.8000). The recent National Dairy Product Sales Report gave support to whey futures after posting a weekly increase of more than a penny to settle above 69 cents.  Margins for dairy producers are still looking very good as corn and soybean meal futures continued to slide lower Thursday.

Class IV Futures
Thursday’s Class IV trading session continued to cast a bearish tone.  Futures settled 13 to 33 cents lower through the end of 2014 and the Q1 average in 2015 settled at $18.82 (DOWN 0.18) but traded down to $18.42 (DOWN 0.58) in the afternoon session.  Butter futures sold off sharply Thursday with January 2015 settling down the limit (5 cents). The Oct-Dec contract average settled at 1.9025 (DOWN 0.0366). NFDM futures also sold-off Thursday after seeing a big slide in the spot market.

CME Spot
Thursday’s spot cheese market showed a bit more carry over buy interest that we have been seeing of late.  One cheddar block traded a quarter of a penny higher, and two cheddar barrels traded at half a penny higher. Bidders drove the price up another penny in barrels but could not find any offers before the close. The spot NFDM market opened up with multiple sellers looking to unload product and continued dropping their offers until a trade occurred at $1.7350 (DOWN 0.0375). The continued sell-off in NFDM futures is an indication that CME spot prices may not be done moving lower.



Disclaimer:  The risk of loss in trading futures and options can be substantial.  Past performance is not indicative of futures results.