Wednesday's CME Dairy Market recap

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

Class III Futures

Wednesday’s Class III market was choppy at best. July – December’s contracts traded anywhere from 14 cents lower to 11 cents higher. Estimated volume on the Globex was at 1,407 contracts. Cheese futures showed weakness in the front months as July settled at $2.0870 (DOWN 0.0050) and August at $2.0790 (DOWN 0.0070). The deferred contracts strengthened on a slight rally Wednesday as the October - December average settled at $1.9923 (UP 0.0117). Wednesday’s milk production report is viewed as slightly bearish due to a revision to April’s cow numbers, but the Class III market countered that by moving higher during afternoon trading. The October - December average moved to $20.26 (UP 0.20).

 

Class IV Futures

Class IV futures rallied Wednesday as the July – December contract average settled at $21.63 (UP 0.33) with the support of both butter and NFDM. Butter futures settled limit up (UP 0.0500) through November, coming half a penny shy of finishing out the year as December settled at 1.9500 (UP 0.0450), although December did reach the limit during afternoon trading. NFDM futures chimed in with a bit of a run as July NFDM settled at 1.8200 (UP 0.2000).

 

CME Spot

Wednesday’s CME cash session showed a mixed outlook for cheese prices. Cheddar blocks traded three times and settled two cents lower. Cheddar barrels traded only once, but a penny and a half higher than previous as cheese futures continue to be at a premium to spot. Butter had another strong session Wednesday as seven loads were sold and the market settled at $2.2525 (UP 0.0575). The gap between futures and spot has now been closed with Wednesday’s settlement at a $0.0495 premium to the July futures contract.

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



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