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

Class III Futures

Tuesday’s Class III market opened lower across the board. The September contract even traded as low as $22.06, but after seeing higher cheese prices at the Global Dairy Trade (GDT) auction and a return of buyers to the CME spot cheese market the trend was reversed. The market rallied to settle 12 to 52 cents higher Sept – Jun 15. The Sept – Dec contract average settled at $20.88 (UP 0.37). September and October settled at new contract highs, but the USDA’s July Milk Production Report took some wind out of the market’s sails as it showed that production was 3.9% higher vs. last year. Class III contracts still traded higher during the afternoon session, but tapered off slightly from where they were.

Class IV FuturesSpot butter buyers were aggressive again on Tuesday bringing the market back to the $2.6600 (UP 0.0250). Butter futures reacted by jumping higher in the front months. The Sept – Dec contract average settled at $2.2895 (UP 0.0244). NFDM futures sold off after the GDT auction showed some very bearish prices for SMP. The Oct – Dec contract average settled at 1.4395 (DOWN 0.0138). The Class IV market was very quiet again on Tuesday with very few trades. August and October moved 5 and 11 cents higher respectively, and Q1 2015 was down 19 to 33 cents.

CME Spot

Cheese buyers stepped back up to the plate on Tuesday bringing cheddar blocks back to where they were to start the week. Four blocks traded at prices ranging from 2.1750 to 2.2000, and bids drove the market up another penny to settle at $2.2100. The NFDM had a bid come in at $1.3225, but sellers were not willing to drop offers more than a penny. The butter session had the bar set high as a load was offered at $2.6900 on the open. Bidders moved the market higher and higher, but after reaching $2.6600 they weren’t willing to reach any further. The spot butter market is only 15 cents off of its all-time high that was reached in 1998.

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