Trader sentiment around CME Class 3 milk futures remains cautious, with macroeconomic factors like consumer demand and feed grains shaping Q4 outlook. As the data demonstrates, the BCOM has exhibited a varying degree of correlation with both the S&P 500 and treasury markets. Correlation with equity markets has been strong at times, but we have also witnessed strong reversals and periods of near zero, or even negative, correlation. This means that when stock prices fall, commodity prices would rise or remain stable, providing a counterbalance to portfolio losses. Similarly, during periods of rising interest rates, which negatively impact bond prices, commodities can offer an alternative source of returns as they are driven by unique supply and demand dynamics, often influenced by global macroeconomic factors, inflation, weather patterns and industry-specific trends. With 350,000+ traded per day on average and OI peaking at 1.7 million, enter/exit positions with ease. September CME Class 3 milk futures hold in a narrow $17.60–$17.85 range, awaiting clearer signals from next week’s dairy product inventory report.
