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

Gains in cheddar blocks and barrels helped provide positive momentum to Class III futures all the way out to the June 2015 contract. Prices rose the most in the front months, March being the leader, gaining 21¢ to settle at $22.86/cwt., another new high.

There is a lot of talk about a significant milk production increase across the country, as well as on the other side of the Atlantic, which is helping to meet domestic and international cheese demand. But it is worth mentioning that domestic prices are starting to lose their luster in comparison to international prices, so this could potentially bring about some demand destruction and/or price resistance. Both domestic and international whey demand remains strong, but there is increasing concern that price resistance will start to show up with further increases.

The Class IV futures traded mostly unchanged to slightly higher, with single-digit gains in March, June and August, but a 7¢ loss in May. According to Dairy Market News, the demand for NFDM powder remains so great that producers and manufacturers are reporting it’s starting to affect the amounts of cream designated for butter production. More and more cream is going into the production of WMP and being sold to China at staggering rates, so this is the cause of the major run-up in butter prices last week.

FC Stone's annual Dairy Outlook Conference will be held June 18-19, in Chicago. Visit www.intlfcstone.com/events for information.


March 10 spot session results:

Block cheese: $2.23 (up 0.75¢)

Barrel cheese: $2.27 (up 2.0¢)

Grade A NFDM:  $2.04 (unchanged)

Butter: $1.8850 (up 0.5¢)


Today's expectations:

• Class III to open firm

• Cheese to open firm

• Dry Whey to open steady

• Class IV to open higher

• Butter to open firm

• NFDM to open firm


Grain futures

The grain complex experienced a significant amount of much-needed downside activity today. Markets traded lower across the board prior to the World Ag Supply & Demand Estimates report, and those losses accelerated after the number was released. Moving forward, it will be imperative to monitor cash movements, South American harvest progress as well as weather issues in the U.S. that could lead to planting delays.


Today’s expectation:

• Grain complex to open soft


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