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

Class III futures continued the push higher, putting up double-digit gains throughout the entire 2014 complex with the exception of February.  March and April both settled up 39¢, paving the way for substantial gains in the third and fourth quarter packs as well.

Inventories and production are still showing signs of uncertainty, and the price movement is communicating that  demand for cheese is still there and end users are willing to pay for it. It looks as if cheese prices will stay at current levels and possibly retest the upper end of the range seen in previous weeks.

Overseas, milk and cheese production is really taking off as excess milk supplies line up on ideal weather conditions and the desire to take advantage of high milk prices. We look to Thursday’s release of international prices to provide further direction.

Whey finished up the day. Domestic demand remains steady; appetites for exports are growing internationally, but as cheese production jumps back on track this market should subside as supply increases.

The Class IV market posted gains – with the exception of February. August and September contracts had the biggest gains, up 29¢ and 22¢, respectively. NFDM futures saw some heavy carryover from last week, settling up. The demand for powder has been driving this sector. Butter futures posted gains for the second quarter through the remainder of the year. Butter appears to have found a happy equilibrium for both the consumer and end user, around the upper $1.70-$1.80/lb. level, where demand for domestic consumption is seeing growth and international interest is trending higher as well. With stocks steady to higher, look for butter to stay range bound, while powder does all of the heavy lifting for Class IV.

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


Feb. 24 spot session results:

Block cheese: $2.1825 (up 2.0¢)

Barrel cheese: $2.1750 (up 1.75¢)

Grade A NFDM:  $2.0475 (up 0.25¢)

Butter: $1.8000 (up 1.5¢)


Today's expectations:

• Class III & Cheese to open firm

• Dry whey to open steady

• Class IV to open firm

• Butter to open firm

• NFDM to open higher


Grain futures

Grains continued their trend from last week with steady-to-higher price action across the entire complex, supported by soybean fundamentals, updates on 2014 plantings, continued fund buying and export inspection numbers that came in at the high end of expectations. Cumulative soybean shipments are 192 million bushels ahead of last season, while we are through less than 6 months of the current marketing year. Corn settled mixed: down for old crop; up for new crop.


Today’s expectation:

• Grain futures to open soft


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