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

Class III Futures

Wednesday’s spot cheese market continued to shoot higher providing a shot in the arm for the front months in cheese futures. The September contract settled at $2.2020 (UP 0.0360), and the Sept – Dec average settled at $2.0195 (UP 0.0107). The Class III front months also received a boost in the front months as Sept – Nov contracts moved 7 to 29 cents higher, however the deferred months showed some weakness as Dec – June 2015 contracts settled 9 to 15 cents lower. September and October made new contract highs for the second day in a row. With a massive wave of milk on the way it is hard to believe that this prices will hold, but for the time being they are providing excellent hedging windows for producers.

Class IV Futures

Butter futures soared higher again on Wednesday as the Sept – Dec contract average settled at $2.3328 (UP 0.0433). NFDM futures continued to collapse as the April- June 2015 contracts all settled down the limit (DOWN 0.0400). The Class IV market was once again caught in a tug of war. The front months were relatively flat, but the Feb-June 2015 contracts sold off sharply. U.S. butter prices remain at a huge premium to the international market, but a supply shortage has propped up prices for the time being.

CME Spot

Cheese buyers were aggressive again on Wednesday bringing the market up four cents in the blocks with three trades, and up four and a half cents in the barrels with no trades. The NFDM session had more of a sell off with no trades. One bid came in well below the market, but the sellers were not willing to reach for it. The spot butter market had a strong buying presence as nine loads traded and the market moved four cents higher. Spot butter is now just 11 cents off of its all time high!

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