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

Class III Futures

The dairy complex at the CME was very quiet Monday. Only an estimated 965 Class III contracts were exchanged on the Globex platform.  Class III futures pushed higher through the end of the year following another supportive spot cheese market. Aug – Dec contracts settled 1 to 26 cents higher and continued to move even higher during afternoon trading. The first half of 2015 showed a bit of weakness Monday. The Jan – Jun contract average settled at $18.05 (DOWN 0.01). Cheese futures did not have much of a reaction to the bullish movements in the front months of Class III. The September and October contracts settled 2.5 cents and 1.8 cents higher respectively.

Class IV Futures

A strong rally in butter futures along with a bearish day in NFDM futures left Class IV futures mixed on Monday. Butter futures rallied after the spot market showed a strong buying presence. The Sept – Dec contract average settled at $2.0725 (UP 0.0233). NFDM futures continued to show weakness Monday. Volume was extremely light as the front month contracts dipped slightly lower. Class IV futures had no major movements on Monday. If butter continues to show strength we could see more action in Class IV, but with U.S. butter at a significant premium to the international market it is hard to take a bullish stance.

CME Spot

Monday’s spot cheese market showed more buyer activity as cheddar barrels were pushed a 1.25 cents higher. Sellers were offering cheddar blocks, but once the offers got a penny below Friday’s settlement price buyers bought two blocks to settle the market there. The NFDM session had more aggressive selling Monday as the market dropped another two cents. A strong buying presence brought the spot butter market out of its $2.4000 deadlock and brought the market a penny higher. During the session 16 loads traded at prices ranging from $2.3900 to $2.4100.

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