Tuesday’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

Producer margins improved again on Tuesday as Class III futures rallied and corn and soybean meal futures sold off sharply. The Class III Sept – Dec contract average settled at $22.10 (UP 0.35). Sept corn and soybean meal futures settled at $3.56 (DOWN 0.04) and $3.887 (DOWN 0.174) respectively. The strong buying presence in the spot cheese market sent cheese futures much higher as Sept – Dec contracts settled 2.3 to 5.3 cents higher. The Class III market has been making a sort of parabolic climb lately as the bullish front month contracts have moved significantly higher than the deferred months. The Sept – Dec contract average is $3.89 higher than the Jan – Jun 2015 contract average. That gap was at just $2.18 on August 1st.

Class IV Futures

The trend reversal in butter futures continued to drag the front months in the Class IV market lower Tuesday as Oct – March 2015 contracts settled 5 to 31 cents lower. Butter futures settled down the limit (DOWN 0.0500) in both Sept and Oct, and half a penny to 4.5 cents lower Nov – Aug 2015. NFDM futures received a bit of support Tuesday as contract settled unchanged to 2.475 cents higher through across the board.

CME Spot

After a quiet Monday, spot cheese buyers were aggressive again on Tuesday. Four cheddar blocks traded to four different buyers as the market moved 2.5 cents higher. Cheddar barrels were bid up alongside the blocks, but none were offered and the market settled four cents higher. The spot NFDM market may have found a new level of support as five loads traded and the market settled at unchanged. The spot butter market was brought three cents lower before buyers started taking interest. Five loads traded at $2.7500 and then another at $2.7550 settling the market 2.5 cents lower.

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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