Editor’s note: This market commentary is provided by the Dairy Division at FCStone/Downes-O'Neill in Chicago, Ill.
A silent spot market with no trades, no bids and no offers — the futures market felt that way all day long, as just 360 trades occurred on the day. Prices traded mixed throughout the session, unable to sustain a move in either direction but ultimately closing mostly higher. Prices managed to work their way mostly higher in spite of a softer spot butter market, leading to a pullback there and in class IV, as well being the only real news of note in the dairy markets. Expect a quiet futures market until the spot market offers a sense of direction to get the week going.
With the dairy markets generally trading sideways lately, we recommend that producers who would like downside protection for the balance of 2011 to explore those opportunities. Call to discuss.
Cash-settled cheese futures saw 14 trades on the day Monday, with prices mixed in sympathy with the Class III market. Only the May to August contracts saw a price change, as they were mixed from -0.006 to +0.015. 5. Trades did occur in November as prices were unchanged there.
Planting progress this week was very interesting with corn coming in well ahead of trade expectations for ~30% planted, with the actual showing 40% completed. Iowa made a simply astounding leap from 8% last week to 69%. Even though we eclipsed trade expectations rather easily, the way we did so seems to mask a still underlying problem, as the Eastern Corn Belt remains very slow: Indiana at 4% vs. 49 on avg. with Ohio at 2% vs. 54 on avg. While the Northern belt has seen some planting take place, it’s clear those states are behind, as well: SD 17% vs. 33% avg. MN 28% vs. 65% avg. WI 16% vs. 45% avg. And, with no number posted for North Dakota, we’re certain they are well behind as well — likely closer to the 2 to 4% range than 15% to 30%. We saw this quote from NDSU economist Frayne Olsen stating there is zero odds that all of ND’s corn will get planted this year.
With a USDA report coming tomorrow morning, we don’t expect a major reaction from the market today ahead of that. But, with planting progress released after the close yesterday and a wet weather forecast for the remainder of the week, there is not a lack of news to trade off of. Report estimates included below.
We look for corn to open 2 to 9 cents higher and beans to open 1 to 3 higher.
Daily CME spot market prices:
Block cheese $1.6475 (no changet)
Barrel cheese $1.66 (no change)
Butter $2.05 (down 4.5 cents)
Grade A NFDM: $1.64 (no change)
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