Class III Futures
The Class III market kicked off with a bullish Wednesday overnight session. The July and August contracts traded up as high as 22¢ and 35¢, respectively. As the CME spot cheese market approached, the tables turned and futures retreated back down close to previous day settlements. They continued to fall after block cheese posted declines. July settled at $21.61/cwt. (DOWN 0.10) and August at $21.31/cwt. (DOWN 0.03). Class III volume was strong on the Globex platform with an estimated 1,522 contracts traded. Whey futures settled higher across the board on light volume with the July contract settling at 66.0000 (UP 0.7500).
Class IV Futures
The overnight market also conveyed bullish implications for Class IV futures early Thursday morning as the July and August contract up to 15¢ higher and September up 27¢. But a bearish spot butter session and a down day in butter futures dampened any chance of holding the rally. NFDM futures offered some support as the July – December contracts moved anywhere from a penny to 2.225¢ higher. Class IV futures settled slightly higher through the rest of the year but the effect of the down day in butter futures was certainly noticeable.
The bearish tone in the spot cheese market continued Thursday as cheddar blocks settled at $2.0000/lb. (DOWN 0.0300). A lone seller sold three blocks and one barrel during the session. Cheese futures continue to price at a 7¢ premium to spot which could signal a possible downward correction. Butter showed its first sign of weakness this week as the spot session settled at $2.2350 (DOWN 0.0175). Butter futures still remain at a slight discount to spot so the potential for volatility on both spot and futures is evident.
Disclaimer: The risk of loss in trading futures and options can be substantial. Past performance is not indicative of futures results.