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

Class III Futures

Wednesday’s overnight market brought Class III futures into Thursday slightly higher, but after some aggressive buying in the spot cheese market Class III contracts were off to the races. The Aug – Dec contract average settled at $21.06/cwt. (UP 0.27). This is the highest level seen since late June. Cheese futures chased the cash market upwards, but settled at a about a four cent discount. The Aug – Dec contract average for cheese settled at $2.0188/lb. (UP 0.0238). This market is providing producers with an excellent chance to lock up prices in the months to come.

Class IV Futures

Butter futures continued their strong rally again on Thursday after receiving a shot in the arm from the spot market. The spot butter market settled at $2.6600/lb. (UP 0.1600) showing us that the immediate demand for butter is stronger than ever. Futures reacted to this by settling up the limit (UP 0.0500) Sept – Jan 2015. The NFDM market had a different tone Thursday as selling pressure brought the spot price down sending futures into a sell-off through June 2015. NFDM futures dropped 1 to 4 cents Aug – June 2015. The opposite movements in these markets had Class IV futures caught in the middle of a tug-of-war. The September contract settled 15 cents higher, but during afternoon trading it was brought back to unchanged. Volume was light and there were no significant movements.

CME Spot

Thursday’s spot market was very exciting to say the least. The cheese session had a strong buying presence as four cheddar blocks traded at prices ranging from $2.1600 to $2.1900/lb., and the market settled at $2.1900/lb. One cheddar barrel traded at $2.1875/lb., but bids brought the market up before the close to the settling price of $2.1950/lb.. The NFDM session continued to dip lower as sellers searched for buying interest. One load traded at $1.4200/lb. and the market settled there. The butter session was filled with aggressive buyers as three buyers bought a total of 13 loads at prices ranging from $2.5225 to $2.6600/lb. The market settled at $2.6600/lb., which is a staggering 16 cents higher than Wednesday’s settlement price.

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