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

The spot cheese market took center stage yesterday, narrowing the block-barrel spread to 9¢. The market is seeking some sort of equilibrium in the low-$2.00/lb. price range. Fresh cheese is available, but the question seems to be: Do you want to pay for it? Cut/wrap operations continue to fill holiday needs. Near-term domestic demand is keeping domestic prices above world prices. We’d expect the block market to stay over $2.00/lb. for the balance of the week, potentially making a mild move back to the upside sometime next week. But the longer-term fundamentals continue to look bearish.  

The spot butter market fell another 3¢, to $1.77/lb., with no trace of buyer interest. The November futures settled limit down to $1.78/lb., hinting towards even lower cash prices in the short term. Class IV futures traded mixed.

The spot NFDM market settled unchanged. Given about 40% of our NFDM is traditionally exported, traders suggest our domestic spot prices should continue to drift lower, as we are not competitive in the export markets.

There has been talk that China is still sitting on big inventories of milk powders. According to several public company financial reports, sales there have been sluggish recently.


Oct. 28 spot session results:

Block cheese: $2.1000 (down 4.0¢)

Barrel cheese: $2.0100 (up 8.75¢)

Grade A NFDM: $1.2400 (unchanged)

Butter: $1.7700 (down 3.0¢)


Today's expectations:

• Not available


Grain futures 

Soymeal futures failed to sustain a strong overnight rally, closing slightly lower on the day. Soymeal has been driving the grain markets, so as goes meal, so goes corn, wheat and soybeans. Rain caused harvest delays, and logistical issues stemming from tight rail capacity have caused the market to add significantly over the last 2 weeks.

Weather is now cooperating and harvest is rolling along this week, so expect significant work to get done this week.

The market is beginning to prepare for the Nov. 10 USDA report.  Many believe we could see corn carryout as large as 2.3 billion bushels.  A stocks-to-use ratio of that size would suggest much lower prices.  


Today’s expectation:

• Not available


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.