Class III and cheese futures were prompted by another round of strength in the spot market yesterday, as the block price continued its march to a fresh 2015 high at $1.68/lb., triggering double-digit moves in nearby Class III contracts.
Prices fall modestly through the week at most locations. Prices at most market locations outside of the Northeast fell this week, generally by less than 10%. The Henry Hub spot price began the week at $2.99/MMBtu, fell through the week, and settled yesterday at $2.82/MMBtu. Prices at other major trading hubs moved in a similar pattern; the PG&E Citygate price, serving Northern California, fell from $3.34/MMBtu last Wednesday to $3.19/MMBtu yesterday. Prices at the Chicago Citygate fell from $3.01/MMBtu last Wednesday to close the week at $2.76/MMBtu yesterday.
Macro developments, domestic fundamentals and an evolving technical picture suggest we’re about to snap out of the coiling pattern we’ve been in for the past week and revisit volatility. There appears to be fodder for both bulls and bears.
The spot cheese prices both inched their way to gains following the Cold Storage report. Even with another push to the upside in the spot market, the Class III and Cheese markets couldn’t look away from the bearish side of the coin in butter.