Class III milk markets were off minimally on Tuesday to kick off the shortened trading week. Initial weakness came from the GDT results, where cheddar and mozzarella both declined and then CME spot cheese remained mostly unchanged. On the butter side, the main trade seemed to be the cash and carry, as spot was bought while futures sold off. Despite today’s convergence, there is still around a 10-cent carry in butter futures out to the end of 2025. This carry will continue to incentivize butter production and holding inventory. NDM has the opposite story, as negative carry across the curve is encouraging participants to cut production and bring whatever inventories on hand to sell on the spot auction.
Today’s Highlights from Ever.Ag’s Know Your Markets
- The CME butter market continued its pattern of dropping below, then popping back over the $2.40 mark. Spot prices jumped to $2.4100 per pound, adding $0.0325, with nine lots trading. The rest of the CME was quiet, with only barrels (down a quarter cent to $1.8150 per pound) showing any movement.
- Futures markets didn’t see any major moves. The March Class III contract shed a dime to close at $19.60 per hundredweight, while Class IV dipped to $19.26, four cents lower.
- Prices mostly moved lower at this week’s GlobalDairyTrade auction. The biggest declines were in cheddar, down 3.2% to $2.21 per pound, and SMP, which shed 2.9% to close at $1.25 per pound. Only butter climbed higher, up 2.2% to $3.35 per pound (adjusted to 82% butterfat).
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.
