Dairy markets: Last week in review

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

Nearby Class III futures bounced Friday on moderate volume amid renewed buying interest for both spot block and barrel cheese. We’ll call Friday’s nearby rally a timid bounce, but the second half continued its lower grind. The deferred market developed a sluggish trade late last week, in part, on speculation of lost export business in the second half. Also, market participants are paying close attention to milk receipts in the Midwest as temperatures warmed up here over the past week.  To date, the “flush” is not in full swing.  With May Class III at $2.0850/cwt. and June at $1.9550/cwt., the main question for the short term is whether these futures price discounts to spot will last.

Dry whey futures finished the week on a modestly stronger note.  The market generally seems in balance as far as discussions are concerned.

Nearby Class IV futures found some support on Friday and, inspired by strength in NFDM futures, closed steady to higher through November.  While both domestic powder price weakness and slowing global demand are playing a large role in Class IV weakness of late, stable butter prices continue to tug in the other direction.  We expect then to see more volatility this week and through the end of April. 

The key feature to watch for in determining butter price weakness is milk supply.  U.S. milk supply, although impressive so far in California, has yet to see the kind of numbers one would expect from $20+/cwt. milk.  A 1.2% increase is not going to cut it.  And since we’re not likely going to build inventory of butter for months, the market continues to find underpinning support.

 

April 11 spot session results:

Block cheese: $2.17 (up 0.5¢)

Barrel cheese: $2.08 (up 0.5¢)

Grade A NFDM: $1.9075 (up 0.75¢)

Butter: $1.97 (unchanged)

 

Today's expectations:

• Class III to open lower

• Cheese to open mixed

• Dry Whey to open steady

• Class IV to open steady

• Butter to open mixed

• NDFM to open steady to firm

 

Grain futures

The corn market ended last week lower on early reports of planting in southern Illinois, Iowa and parts of Kansas. Also, corn export sales were less than expected last week.  

General concerns surrounding anything from banking to bird flu seemed to act as a “cooler” for the once red hot soybean market. Chinese importers have defaulted on 18.4 million bushels of U.S. and Brazilian bean purchases in recent days.

On tap for today will be this afternoon’s Planting Progress Report.

 

Today’s expectation:

• Corn to open higher

• Soybeans to open higher

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

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