January 28, 2017

The Block, Barrel Spread Widens

 |  By: Know Your Market

By Mike North, Commodity Risk Management

Markets continue to be unimpressed as the Friday CME spot dairy session unfolded.  However, in that session some very interesting things took place: specifically in cheese. The cheese market, as we alluded to yesterday, has continued to undergo a widening of the spread between the block and the barrel.

Following Friday’s trade, blocks moved 4 ¼ cents higher on the heels of bidding but saw no trades. That price finished at $1.68 ¾. Barrels remained unchanged after three trades took place and finished at $1.44 ¾. That takes the spread to 24 cents.

Only one time in history has that been witnessed previously and that was in the fall of 2009. In the month of December, barrels made a precipitous move lower while blocks, while still falling, maintained their ground a little bit better. That opened up the spread to a record width of 26 ¼ cents.  If the market should continue this trend we are just 2 ¼ cents from establishing a new record width for the block barrel spread. All eyes will be watching.  

Elsewhere in the spot trade, butter joined in on the fun by moving 3 ½ cents higher to $2.22 after seven loads traded hands.