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

Class III Futures

Class III futures finished out the week on a bearish note. Dec ’14 through Sep ’15 contracts were 5 to 39 cents lower, with most of the weakness in the front portion of the curve.  Though both blocks and barrels were higher today, the fact that blocks did trade and were offered back down was a signal for weakness.  Also, it is widely expected that large quantities of cheese from overseas will begin making its way to the US beginning in November, further depressing prices.  Cheese futures ended the session lower as well through Q3 next year.

Class IV Futures

Class IV futures settled largely unchanged on Friday with little activity.  Zero activity on the cash markets had a ripple effect into the Class IV complex, as butter futures were slightly higher in the front few months but no change in settlement prices in 11 or the 12 months in 2015.  NFDM futures continued to be pressured with March to June ’15 settling under $1.30 per pound a price not seen on the forward curve in over a year.  As the first snowflakes were seen in the Chicago area on Friday, the dairy markets appear to be entering a new month with a bearish tone following the dim outlook of the global marketplace.  The next GDT auction will take place on Tuesday which will provide a glimpse into global market direction.

CME Spot

Cheddar blocks were bid up to $2.1475 before being sold once and offered back down to $2.1400. The barrels moved 4.5 cents higher on bids alone to tighten the block/barrel spread back down to a more normal 3 cents. The NFDM and butter sessions were ghost towns on this Halloween Friday as no bids or offers were posted in either market.

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