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

Class III Futures

Thursday’s Class III market opened up relatively flat, but after a bearish spot cheese session, futures began to sell off. The August contract has met resistance around $21.90/cwt. for the second time now. This dip in the futures is still viewed as a correction. Despite record high cheese production this year, cheese stocks continue to lag sharply behind last year due to robust export and domestic demand.  Until we can begin building stocks, Class III futures should continue to be supported.

 

Class IV Futures

The Class IV market was extremely quiet Thursday as the Aug–Nov contracts settled unchanged.  Butter futures had a mixed day without any big moves. Thursday was the first day this week that butter futures have not gone limit up in multiple months. Class IV futures continue to hold at their current levels, but if spot butter makes another run and butter futures follow we could see more upside potential in Class IV.

 

CME Spot

Spot cheese prices fell back below $2 during Thursday’s spot cheese market. A lone seller dropped offers in both the blocks and barrels as buyers sat back with lower bids. Three cheddar blocks traded at prices ranging from $1.9875 to $2.0050. Five cheddar barrels traded at prices ranging from $1.9950 to $2.0225. Cheese futures seemed to be unaffected by the bearishness of the spot market. The Aug – Dec contract average moved only about 3/4 of a penny lower during Thursday’s market.

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