Calendar spreads are one of the most effective ways to express a directional view in dairy markets. They capture the seasonal rhythms of milk production, manufacturing cycles, export windows, and holiday-driven demand patterns in a way that outright futures often cannot. For an experienced commodity professional, these spreads offer a cleaner signal, lower volatility, and tighter execution.
Below is an overview of the dairy spreads that matter most across CME, EEX, and NZX, and why they have become preferred tools for hedgers, manufacturers, and market makers.
Class III Milk — The Core of U.S. Dairy Trading
- Most traded spreads: JUN–SEP, OCT–DEC, JAN–MAR, FEB–APR, MAR–MAY
These spreads capture spring flush, summer heat stress, and autumn cheese production flows. JUN–SEP and OCT–DEC remain the benchmark hedging tools for cheese manufacturers and cooperatives.
Class IV Milk — The Butter & Powder Pricing Curve
- Common spreads: MAR–MAY, APR–JUN, OCT–DEC
Class IV spreads reflect churn operations, powder dryer schedules, and export cycles. The curve structure typically pivots around butter inventories and global powder demand.
Butter — Highly Seasonal, Inventory-Driven
- Most active spreads: APR–JUL, JUL–OCT, OCT–DEC
Butter is one of the most seasonal dairy commodities. JUL–OCT is especially important as markets transition from summer cream surplus into pre-holiday buying and inventory build.
Nonfat Dry Milk — Export-Sensitive Structure
- Most watched spreads: MAR–JUN, MAY–AUG, SEP–DEC
NDM spreads capture global tender timing, shipping cycles, and relative-value opportunities between U.S. and EU powder markets. SEP–DEC often carries the strongest signal ahead of year-end export bookings.
Dry Whey — Thin but Tactically Important
- Typical spreads: JAN–APR, APR–JUL, OCT–DEC
Whey spreads track cheese production cycles closely, providing a niche but useful hedge for processors.
EEX Butter & SMP — The European Seasonal Curve
- Butter: APR–AUG, JUN–SEP, SEP–DEC
- SMP: APR–JUN, JUN–SEP, SEP–DEC
Driven by pasture-based supply and aggressive Q4 demand in Europe and MENA, the SEP–DEC spread is consistently one of the most liquid and informative parts of the EEX curve.
NZX GDT-Linked Markets — Southern Hemisphere Seasonality
- WMP / SMP / AMF: MAR–SEP, APR–OCT, MAY–NOV
These spreads capture the transition from low-season milk availability into New Zealand’s global supply peak. MAR–SEP remains the structural favourite due to its clean alignment with GDT auction flows.
Why Calendar Spreads Matter More Than Outright Futures
For experienced commodity professionals, calendar spreads offer:
- Clearer fundamentals: cleaner exposure to seasonality, less macro noise.
- Better liquidity: tighter bid–ask spreads than outrights.
- Natural hedging alignment: manufacturers hedge programs on spreads.
- Lower margin & lower volatility: ideal for testing and risk-limited strategies.
- Excellent for modelling: spreads reveal structure that outright prices often mask.
Dairy calendar spreads provide a structured, data-rich environment for analysis. Deep enough for true hedging, seasonal enough to be predictable, and diverse enough to stress-test any analytical framework — they are the perfect proving ground within the Yaribu Commodities methodology.