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¢)


Today's expectations:

• Class III & Cheese to open higher

• Dry whey to open steady

• NFDM to open firm

• Class IV & Butter to open higher


Grain futures

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.


Today’s expectation:

• Corn to open up 1¢-3¢

• Soybeans to open 8¢-12¢ higher


The trading of derivatives such as futures, options, and swaps may not be suitable for all investors. Derivatives trading involves substantial risk of loss, and you should fully understand those risks prior to trading. Any reference to past performance is not indicative of future results. All references to futures/options trading are made solely on behalf of FCStone, LLC. All references to swap execution and bi-lateral swaps are made solely on behalf of INTL Hanley, LLC. FCStone, LLC will clear swaps when applicable. Swaps are only available to eligible counterparties. All observations of economic, political and/or market conditions are not intended to refer to any particular trading strategy, promotional element or quality of service provided by INTL FCStone Inc. and its subsidiaries and should be construed as market commentary. All recommendations to buy or sell a specific derivative or forecasting statements regarding market activity and the pricing thereof should be construed as a solicitation in any jurisdiction in where such an offer or solicitation would be legal. Proper context and guidance including but not limited to the particular trading objectives, financial situations and the needs of the intended audience were taken into consideration when this recommendation was prepared. Contact your account representative for specific advice to meet your specific trading preferences or goals. These materials represent the opinions and viewpoints of the author, and do not necessarily reflect the viewpoints and trading strategies employed by INTL FCStone Inc. and its subsidiaries. Sources of information believed to reliable were used in preparing such observations, and no guarantee or representation regarding the accuracy of those sources has been made. INTL FCStone Inc. and its subsidiaries are not responsible for any redistribution of this material by third parties, or any trading decisions taken by persons not intended to view this material.