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

Class III Futures

After two days of correcting the Class III market finally found some support Friday. Volume on the Globex platform was light as an estimated 957 contracts traded. Oct – Aug contracts settled unchanged to 13 cents higher. Cheese futures moved 1.1 cents higher in October Friday, but the contract is still about 13 cents below current spot prices. This implies that October will have a lot of volatility as the two markets move towards convergence.

Class IV Futures

Butter futures put together another strong rally Friday settling up the limit in November (UP 0.05).  The volatility in this supply-short market has been wild as limit swings in the prices have almost become the norm. NFDM futures pushed higher Friday, especially in the first half of 2015. The H1 average for 2015 settled at $1.4340 (UP 0.0108). Class IV futures settled 11 to 30 cents higher Oct – Feb 2015, but the market overall was quiet with very little volume.

CME Spot

Friday’s spot market was quiet as there were only two trades in the three markets. Cheddar blocks moved a penny higher with one trade. Cheddar barrels moved two cents higher with no offers. The spot butter market moved half a penny higher with one trade at the settlement price of $2.7550. With such little activity in butter today it is hard to derive a strong opinion, but the spot price could very well hold at around the $2.7500 range for a little while longer.

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