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

Yesterday spot session was one for this year’s scrapbook. After a quiet Monday, spot cheese sell activity picked up and the Block cheese price fell to just below the $2.00/lb. level for the first time all year (since Dec. 19, 2013).  The Barrel price, too, fell to $1.96/lb., its lowest level since Jan. 6, 2014.

One would expect that such a pivotal move for spot cheese would usher in a tidal wave of selling on both Class III and Cheese futures.  This was not the case yesterday. 

NFDM futures weakness resumed Tuesday.  The fundamental picture of spot NFDM is still soft.  Without big chunks of powder going to export markets, the pause in the high-$1.70 area may be just that.  Commercial demand is not dead, it’s just rather quiet amid increasing supplies. 

What we may give up in NFDM prices, we very well may get back in Butter.  Spot butter edged higher again yesterday.  While chatter of this being “too high” is growing, we expect more upside for the spot market now that the butter has turned higher after Easter and before summer heat.


May 13 spot session results:

Block cheese: $1.9975 (down 4.75¢)

Barrel cheese: $1.9600 (down 6.0¢)

Grade A NFDM: $1.7800 (unchanged)

Butter: $2.1750 (up 0.75¢)


Today's expectations:

• Class III & Cheese to open lower

• Dry Whey to open mixed

• Class IV & Butter to open mixed

• NFDM to open lower 


Grain futures

Grain markets continue to chop largely sideways to slightly lower after last week’s mixed USDA reports. While there remains tightness to the old crop balance sheet, the new crop developments and strong planting so far (corn) has taken a good deal of bullish luster off the markets. We’re in the throes of a weather market and those fluctuations in weather patterns ought to be the biggest driver of price moves.  For now those weather patterns show the good rains subsiding for the Western Corn Belt and drier, planting weather until the end of next week.


Today’s expectation:

• Grain complex to open mixed


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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