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

CME Spot

All three markets had at least one trade Friday for the first time this week. Although there wasn’t a lot of activity during today’s cheese session, the overall tone set by this week’s spot cheese market was slightly bullish. The weekly average price for cheddar blocks settled at $2.0420/lb. (UP 0.0285) and barrels at $1.9650 (UP 0.0155).  The NFDM closed out the week at $1.8250/lb. (DOWN 0.0325). The July NFDM futures contract settled at a $0.025 discount to Friday’s spot price. Spot butter traded eight loads Friday with a weekly volume of 37. This is relatively high volume for the spot market. Butter futures settled up the limit ($0.05) July through October.  Butter futures are still trading at a slight discount compared to spot, but Friday’s rally in butter continues to narrow the gap.

Class III Futures

Friday’s Class III futures traded relatively flat on an extremely quiet day.  July through December settled between unchanged and 0.07 higher. Trading volume on the Globex electronic platform was estimated at 374 contracts.  Cheese and dry whey futures saw less activity than yesterday. Whey futures sold off with Q1 2015 averaging 52.67¢/lb. (DOWN 0.63).

Class IV Futures

The butter futures rally seen Friday did not spill over into the Class IV market. The Q4 average for NFDM futures settled at $1.6833 (DOWN 0.0067) and may have held Class IV back from any increases. Trading volume was low at an estimated 40 contracts. The Q3 contract average settled at $21.74 (UP 0.02) and Q4 average settled at $20.26 (DOWN 0.03).

Next week, the Global Dairy Trade auction and US Milk Production Report should provide the CME spot and futures markets with more direction.

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