Editor’s note: This market commentary is provided by Curtis Bosma at HighGround Dairy in Chicago, IL.
Class III Futures
Wednesday’s Class III market started off on a bullish note in the front months, and continued to rally after a supportive spot cheese session. August and September both settled a quarter higher, and traded more than 30 cents higher during afternoon trading. Cheese futures settled 2.5 cents higher in August and September, but were very flat beyond those months. Cheese futures and spot cheese price levels continued to converge Wednesday. Spot cheese is still at a premium, but the gap is now less than two cents per pound.
Class IV Futures
The spot market provided no direction for Class IV futures Wednesday as both NFDM and butter settled at unchanged. Class IV futures continued to boost higher through the end of the year settling 1 to 18 cents higher Aug – Dec. The Jan – Apr 2015 contracts sold off slightly settling 5 to 15 cents lower. Butter continued its run settling up the limit in September. The Aug – Dec contract average settled at $2.1002 (UP 0.0247). Butter futures are currently trading at a four cent discount to spot, but as futures continue to rally we could see more tightening between the two markets.
CME Spot The spot cheese session was the main source of excitement during Wednesday spot market. Three cheddar blocks traded at prices ranging from $2.0000 to $2.0050. Six cheddar barrels traded at prices ranging from $2.0400 to $2.0550. The spot NFDM market saw a bit of action as two loads traded at unchanged.\
Disclaimer: The risk of loss in trading futures and options can be substantial. Past performance is not indicative of futures results.