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

Class III Futures

The Class III market lacked direction Tuesday as 2015 contracts settled $0.02/cwt lower to $0.05/cwt higher. Volume on the Globex platform was light with only an estimated 1,152 contracts trading. Sentiment in the dairy complex at the CME is still bearish despite the specs of green seen on the screen Tuesday. Fonterra downgraded their forecasted Farmgate Milk Price for 2014/2015 Tuesday from $5.30 per kgMS to $4.70 per kgMS. Substantial volatility in the global dairy markets is expected over the next year.

Class IV Futures

Only a handful of trades occurred in Class IV futures Tuesday. The lack activity in the spot butter market has the Dec butter contract holding above $1.90/lb. The New Year will bring a significant reduction in butter prices with the Jan - Jun futures settling in the $1.6650/lb to $1.7750/lb range.

CME Spot

Two cheddar blocks traded at unchanged. Two cheddar barrels traded after offers brought the market down to $1.4900/lb. The NFDM session had bids and offers, but participants showed no urgency and no trades occurred. No markets were made for spot butter Tuesday.

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