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

Class III Futures

The overnight market brought Class III futures into Monday morning much higher.  The September and October contracts traded as high as $23.85 and $22.85 respectively, but after a fairly quiet spot cheese market the futures fell off their highs. The Sept – Dec contract average settled at $21.75 (UP 0.22).  As U.S. producers ramp up their production, and international prices are steeply declining, it is still easy to be bearish in the long term. However, last week’s USDA Cold Storage Report showed us that we still have a supply shortage which has put U.S. dairy products at a premium for the time being.

Class IV Futures

Mondays’ Class IV market was very quiet as front month contracts sold off due to a strong correction in the butter market. Sept – Feb 15 contracts settled 8 to 28 cents lower. After setting a new record high spot price last week the spot butter price fell Monday and futures went down with it. Butter futures settled down the limit in five months. The Sept – Dec contract average settled at $2.3494 (DOWN 0.0499).

CME Spot

The spot cheese market had very little activity Monday. Three cheddar blocks traded a quarter cent below Friday’s settlement price, but several bids brought the market back to settle a quarter cent higher. The butter session had some early activity as three loads traded at $2.8225 before aggressive selling brought the market down to settle at $2.7800 (DOWN 0.0425).

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