Class III futures are still trading at a discount to current spot prices, indicating an expectation of a significant spot market break. While dry whey spot has fulfilled its part, spot cheese is still trading in the 10-cent range we have been in since the start of 2025. The spot market needs to break to justify future’s prices – otherwise, we could see an uplift through the front months’ Class III futures curve. Meanwhile, the Class IV complex remains under pressure. NDM continues to erode its premium to global values and butter futures are being aggressively sold, with traders capitalizing on the cash-and-carry opportunity.
Today’s Highlights from Ever.Ag’s Know Your Markets
- Trading was heavy in the CME butter market, with 26 loads changing hands. The spot price eased one cent to $2.3350 per pound. Spot blocks slipped to $1.8700 per pound, a penny lower, while barrels ticked up a quarter cent to $1.7950. One lot of blocks traded. Spot NDM reversed its downward trend, ticking up to $1.2075 per pound, $0.0075 higher, with six lots exchanged.
- After months of uncompetitive pricing, US milk powder is more in line with the global market. The average spot NDM price week-to-date is $1.21 per pound, below New Zealand’s $1.25 for SMP, but still above $1.19 in Europe.
- USDA’s January Cold Storage report was bearish for butter, neutral for cheese. US total cheese stocks reached 1.374 billion pounds, down 5.7% (-82.4 million pounds) on the year, but up 1.5% (+19.9 million pounds) month-over-month. Butter inventories jumped to 270.3 million pounds, up 9.2% (+22.7 million pounds) versus 2024 and +26.1% (+56.0 million pounds) month-over-month. News for both was largely as expected and will likely keep downward momentum in the butter market.
Ever.Ag - The risk of loss trading commodity futures and options can be substantial. Investors should carefully consider the inherent risks in light of their financial condition. The information contained herein has been obtained from sources to be reliable, however, no independent verification has been made. The information contained herein is strictly the opinion of its author and not necessarily of Ever.Ag and is intended to be a solicitation. Past performance is not indicative of future results.
