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

Class III Futures

After holding their ground over the last couple of days Class III futures received a bit of a correction Tuesday as Nov – Jun contracts settled 2 to 25 cents lower. The Q1 average for cheese futures settled at $1.7047/lb Tuesday (DOWN $0.0080/lb). Contracts may continue to find support from buyers who are excited to lock in prices that are much lower than the ones seen last year. With weak demand for US cheese exports and a lighter than usual drawdown in cold storage inventories it is hard to make a bullish argument for Class III and cheese futures over the next few months.

Class IV Futures

Butter futures sold off Nov – Sept after seeing spot butter fall back below $2.0000/lb Tuesday. This sell off spilled over into Class IV as Dec – Mar contracts settled 8 to 31 cents lower. NFDM futures were quiet Tuesday with very light volume, but with the spot price falling the market is due for a bit of a correction.

CME Spot

The weakness continued during Tuesday’s spot cheese market as no markets were made for cheddar blocks and cheddar barrels moved a penny and half lower on offers alone. One load of NFDM traded at $1.1150/lb (DOWN $0.0225/lb) and the market settled there. One load of spot butter traded a tick lower at $2.0175/lb, but then sellers were forced to move their offers down to $1.9900/lb before three more loads traded.

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