Class III contracts sold off sharply Monday, settling 14¢ to 75¢/cwt. lower Jan – June. The February contract settled limit (75¢) down, to $15.74/cwt. An estimated 4,407 contracts traded on the Globex platform. This decline with large volumes indicates that Class III futures are weaker than ever. There is still a great deal of potential downward movement on the horizon so if producers have not hedged it is not too late. However, for the most part the ship has set sail and the days where 2015 futures could be sold at over $18.00/cwt are long gone.
Class IV Futures
NFDM futures fell 1.3 to 4.0 cents /lb Dec – Apr. This sell off spilled over into Class IV, but trading was choppy as contracts settled unchanged to 30 cents lower in 2015. NFDM prices have been converging upon the lower international prices for some time now and there is still more of a sell off on the way. Once butter inventories are rebuilt the Class IV market is going to look ugly for dairy producers. Selling futures in the $15.00 handle may be tough for producers to swallow, but it is difficult to find any optimism in this market.
Buying interest for cheddar blocks brought the price 2.75 cents /lb higher. Three blocks traded before the market settled. Barrels were silent Monday with no bids of offers posted. Aggressive sellers brought spot butter down to $1.9000/lb. Buying interest before the close brought the market 2.25 cents off the low. Three loads traded during the session.
Disclaimer: The risk of loss in trading futures and options can be substantial. Past performance is not indicative of future results.