Editor’s note: This market commentary is provided by the Dairy Division at FCStone in Chicago, Ill.
The Class III bull showed its horns yesterday as 2014 contracts rallied, but 2015 contracts closed mixed on low volume. This move up came on the back of a bullish Cold Storage report for cheese, and reports of tightness in some areas for barrels, despite the ultimate move lower in barrels in the spot session.
There are two points to note with cheese activity. First and foremost, the block-barrel spread has corrected and we are no longer inverted, although we are still outside of the historical norm of 3-5¢. Secondly, the Class III reaction to the trade – while taking some futures contracts off of their highs – was still mostly positive and could not put a damper on higher prices.
Class IV exploded to the upside. Volume was moderate, with many in the market waiting to see what happens with butter. Discounted world butter prices will continue to concern many, and will likely damper prices at some point in the future.
NFDM markets traded up, and the market seems perfectly happy continuing to trade in its current range.
July 23 spot session results:
Block cheese: $2.0400 (up 1.0¢)
Barrel cheese: $2.0325 (down 3.75¢)
Grade A NFDM: $1.6750 (unchanged)
Butter: $2.6200 (up 4.0¢)
• Class III & Cheese to open higher
• Dry whey to open steady
• NFDM to open firm
• Class IV & Butter to open higher
Grain markets posted a mid-week “dead-cat-bounce” and put in gains after slipping to fresh contract lows overnight. Strength in the soybean complex had a residual buoy effect on corn and wheat. Despite continued strong export numbers, sellers have not been shy in pressuring the market lower amidst ideal growing conditions and long fund liquidation. The market will digest export numbers tomorrow morning.
• Corn to open up 1¢-3¢
• Soybeans to open 8¢-12¢ higher
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