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

The spot cheese market continues to move to the upside, but the Class III futures rally looks to be a bit exhausted, and certainly seems to be saying they don’t believe that cheese prices will hold above the $2.10/lb. level for very long. All eyes will be on the spot session today, and bulls can continue to hang their hats on the now-discounted futures market, as well as the spot butter market, which continues to trade higher. Cheese futures saw strong volume, with prices mostly lower. Whey futures were mixed on moderate volume.

There were big volume (NFDM) and price (butter) movements, but Class IV futures did just a moderate amount of both. This market looks to be trapped between a rock and a hard place, with NFDM prices under pressure, but butter prices recovering sharply.

Spot butter prices surged back to the $2.50/lb. level for the first time since July 29. Futures finished the day 3¢-5¢ higher (Sept through Nov 2014), and mostly 1¢-2.5¢ higher (Jan through August 2015). Excess product just doesn’t seem to be out there, and it now seems doubtful large enough quantities will become available prior to the holiday demand season.


August 13 spot session results:

Block cheese: $2.13000 (up 2.0¢)

Barrel cheese: $2.1600 (up 1.0¢)

Grade A NFDM: $1.4900 (down 1.0¢)

Butter: $2.5000 (up 7.0¢)


Today's expectations:

• Class III & Cheese to open mixed

• Dry Whey to open steady to higher

• Class IV to open steady

• Butter to open steady to higher

• NFDM to open lower


Grain futures 

It was a mixed day for grains, but the final result looked very similar to Tuesday. Corn closed higher, while soybeans remained under pressure. The little bit of strength we’ve seen in the corn market certainly hasn’t been enough to change the overall mindset, but there does seem to be some caution given the seasonal propensity to rally during August. A stronger move to the upside in the next few sessions could set up a retest of the $4.00 mark, but given the ideal weather, we’re not ready to turn bullish by any means. A break below the $10.43 level in November soybeans could set the stage for further downside. Early season harvest is reportedly underway down South, which may provide some pressure on basis, as well as flat price in the coming weeks.   

Today’s expectation:

• Corn to open lower

• Soybeans to open lower


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