Editor’s note: This market commentary is provided by the Dairy Division at FCStone in Chicago, Ill.
Class III futures saw both ends of the spectrum in one of the most volatile intraday sessions in recent memory. What started out as follow-through to the downward trend from last week quickly turned around and rocketed higher on the heels of the cheese spot session. The question, now that the block-barrel spread has seen a correction, is whether or not blocks and barrels move lower in unison to a level that would be more in accord with futures, or whether they can maintain support at current levels?
Look no further than how the futures behaved for your answer. May Class III futures closed up 53¢, to $22.03/cwt.; and June rose 31¢, to $20.36/cwt. However, market enthusiasm was limited to the 2Q 2014, with the 2H 2014 and 1Q 2015 snubbing the rally and closing red for the session.
Cash settled cheese futures followed the Class III market closely, with the only real strength seen in the May and June contracts. With the exception of December 2014 and January 2015 contracts, dry whey futures traded better and finished green across the board.
Class IV futures continue to be tugged in different directions by NFDM and butter, resulting in a confused trade that has drifted sideways to lower for some time now. The market will be looking to today’s GDT auction to see if the softer trend will continue.
April 14 spot session results:
Block cheese: $2.1850 (up 1.5¢)
Barrel cheese: $2.1675 (up 8.75¢)
Grade A NFDM: $1.91 (up 0.25¢)
Butter: $1.93 (down 4.0¢)
• Class III, Cheese & Dry Whey to open mixed
• Class IV & NDFM to open mixed
Weather concerns and geopolitical issues are at the forefront of the grain trade. While wheat led the way due to escalating tensions between Russia and Ukraine, soybeans also saw strong upside price action, with May contracts gaining 13.25¢ to close at $14.7625/bushel, and and July picking up 16.25¢ to close at $14.6325/bushel. Corn futures closed higher as well, with the May contract up 4.25¢ at $5.03/bushel, and December up 4.25¢ to $5.0350/bushel. Corn planting progress has been hampered by the weather.
• Corn to open slightly lower
• Soybeans, meal to open slightly 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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