CME Cash Market Summary
Daily CME spot dairy market price summary
Dairy Team - Chicago
- Dairy
Early Morning Update - August 5, 2024
By: Dairy Team - Chicago, Dairy Chicago
Class III and Cheese futures extended losses and dialed up some technical weakness to close out last week. The front-month September Class III contract did something we don’t see often: it made a new contract high by mid-week, failed, and closed lower than the prior week’s low price print. Technically that is called a “reversal” and it tends to portend more downside (at least short-term). And with global commodity and equity markets selling off this morning, it’s not a stretch to say Class III and Cheese futures traders may very well get caught up in trying to liquidate long positions (by selling). Class III futures volume registered at 2,201 and open interest declined by 335. Cheese futures volume tallied at 543 and open interest declined by 28 contracts.
In fact, that might the most interesting piece of Friday’s trade data: Open interest declines.
Class III, Cheese, Live Cattle, Feeder Cattle, and the S&P500 (sept contract) to name a few all saw Open Interest declines. Big negative price moves happening as people rush for the exits post haste. Its important because although directionally more weakness could be in store today (and we expect weakness early), futures price weakness on falling open interest is generally less indicative of a new price trend given that it is somewhat fleeting (when long liquidation cools, air pockets of little selling exist). It really can create more short-term volatility than anything. Big, longer-term, directional moves tend to come with rising open interest.
Spot cheese did fall and fall to levels not seen since June for the block market. Back at $1.85, finished on its weekly low, and with little discussion to close out the week on demand other than “it’s a little quiet out there”. From a supply side of the equation, $1.90/lb. cheese give or take a nickel seems to have some staying power. On the other hand, with interest rates still at 20 year highs and the economy in the cross-hairs, perhaps buyers are willing to wait-and-see how things look heading into the holidays. From a charting perspective, the Block market (weekly chart below) remains by and large in a sideways coil albeit at the lower end of that range today. At this time, we expect that sideways coil to continue here to start the week (NOTE: that was a tough sentence to write with the S&P500 futures contract down 243 points).
While Class III, Cheese and nearby Dry Whey all sold off Friday, Class IV, NFDM and Butter stood idly by watching. Just 12 NFDM futures contracts changed hands Friday. There was a single NFDM load that traded at $124.000, which ought to now behave as a level of support for the market (given that 124.000 was resistance the last year and a half). We shall see. Butter futures saw just 74 contracts though spot was rather active. 13 butter loads traded Friday leaving spot down 2.25 cents at $310.500. Markets are expected to be rather mixed today ahead of tomorrow’s GDT auction.
SGX futures are pointing towards a 4.0% decrease in the GDT price index. Futures were projecting a decline leading up to the last event but the GDT index ended up increasing slightly. Butter prices in particular are showing a potential for decrease as front month futures have moved much lower from where GDT prices settled.
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CME Cash Market Summary
Daily CME spot dairy market price summary
Dairy Team - Chicago
- Dairy
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