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

 

Class III Futures

After seeing some buying interest for cheddar barrels in the spot market, the front months in Class III futures pushed higher on light volume. Contracts held to settle 10¢/cwt higher in Jan and Feb. H2 contracts have been finding some choppy support after free-falling in Dec.

The January crop report sent the grain markets into a frenzy. Corn futures had some initial turbulence, but eventually put together a rally. The USDA cut its forecast for corn production as expected, but did not reduce carryout as much as anticipated. The soy complex experienced a significant sell-off after the report revealed that soybean stocks were much higher than expected.

 

Class IV Futures

With spot NFDM below a dollar, NFDM futures continued to fall Monday, dragging Class IV down with it. The Q1 Class IV contract average is now below $14.00 /cwt. This is the first sign of the $13.00 handle in the dairy complex, but we expect to see it soon in Class III, with many bearish fundamentals there.

 

CME Spot

No markets were made for cheddar blocks Monday, but buyers chased cheddar barrels up to $1.5950/lb (UP $0.0500/lb) trading 3 times along the way. One load of butter traded during Monday’s spot butter market at the unchanged price of $1.5400/lb. 

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

 

CLICK HERE for HighGround Dairy’s January Milk & Feed Market Update