Dairy markets: Class III futures continue rally

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Editor’s note: This market commentary is provided by the Dairy Division at FCStone in Chicago, Ill.

Class III futures continued to rally. We’d not be surprised to see a little profit taking today ahead of the milk production report this afternoon. The dry whey market was silent yesterday. Cheese futures moved higher in sympathy with Class III.

The Class IV market continues to be the leader, as NFDM prices once again were on fire to the upside. The NFDM market closed limit higher from April through December 2014 as the market continues to absorb the news of heavy sales into both Algeria and Mexico in recent days. Indications are prices support is strong at the $2.05 level, and that has deferred futures playing catch up. While most everything else was higher on the day, the butter market was mostly lower. Perhaps Friday’s cold storage report will offer something in terms of direction.

FC Stone's annual Dairy Outlook Conference will be held June 18-19, in Chicago. Visit www.intlfcstone.com/events for information.

Feb. 19 spot session results:

Block cheese: $2.1075 (unchanged)

Barrel cheese: $2.0675 (unchanged)

Grade A NFDM:  $2.0425 (up 1.25¢)

Butter: $1.77 (unchanged)

 

Today's expectations:

• Class III & Cheese to open firm

• Dry whey to open mixed

• Class IV to open soft

• Butter to open soft

• NFDM to open higher

 

Grain futures

It was a day of swings in the grain markets, with soybeans opening to double-digit gains only to trade to near double-digit losses, ultimately closing down. Meal likewise experienced some big swings, ultimately closing lower. Corn and wheat made up a little ground on beans. Corn continues to find fund buying, with the continued strong demand being seen for exports and ethanol usage likely creating a tighter-than-expected supply and demand  projection. Soybeans are seeing some farmer selling, putting pressure on the marketplace as well as a dollar discount on South American beans. We’re still looking at a very tight carryout for this year and strong basis levels leaving the market to likely move more sideways in the coming weeks.

 

Today’s expectation:

• Grains to open mixed

 

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