Product Markets Continue Tug-O-War
As the world waits for this morning’s results of the Global Dairy Trade Auction the CME spot markets continue to move in opposite directions. Over the last week the price spread between CME spot butter and block Cheddar cheese has grown by 22 cents moving to a spread of 85 cents. That’s the greatest price spread that we’ve witnessed between blocks and butter since the summer of 2016 but still a far cry from the peak of that spread which reached $1.54 ½ in September of 2015. That was at a time when butter briefly traded at $3.10 per pound.
Monday’s action in the CME spot trade saw butter rise another 3 cents to $2.51½. Block cheese fell 3½ cents to $1.66½ while barrels followed suite dropping 3¼ to settle at $1.45¾.
Grade A nonfat dry milk got in on the same action dropping ¼ cent to arrive at a final price of 94½ cents.
Despite the tug of war between the product trades, Class III and Class IV markets both struggled to move anywhere with contracts between now and the end of the year finishing largely unchanged on average.