Dairy markets: Class III contract values continue eroding

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Editor’s note: This market commentary is provided by the Dairy Division at FCStone in Chicago, Ill.
The Class III market continued its recent trend of eroding contract values throughout the 2014 and first half of 2015 contract months.  Prices fell between 2 and 38 cents lower in the July through June contracts, while the July 2015 through December contracts settled between unchanged and 2 cents higher, yet yesterday’s selloff seemed to have a confidence about itself as nearly 1,800 futures contracts changed hands throughout the day.  Add in the fact that the cheese futures contracts racked up nearly 600 trades during its bearish performance, July through March 2015 contracts settled between 1.1 and 3.9 cents lower, and yesterday’s performance has traits of a marketplace where participants maybe bailing out of long positions while others are climbing over each other to protect revenues against future, and at this moment seemingly inevitable, declines.
As the spot cheese markets seem content to oscillate within the mid-$1.90 price range for the time being, the futures markets lack any fresh new bullish news to clot the bleed in price at the moment.  Talk of scorching temperatures and a seemingly endless drought out in California could be a factor that would inspire bullish sentiment, yet the impacts of these factors having yet to be realized, are allowing for the potential for the Class III and cheese  markets to grind lower in the near term. If applicable, protect the downside possibilities.   

The National Dairy Products Sales Report (NDPSR) for the week ending July 5th posted with the Block price at $2.0412, up 0.25 cents week over week, while weekly sales estimated at 9,849,296 pounds, down 5.1%.  The Barrel price posted at $2.0479, up 3.14 cents week over week, while sales were estimated at 8,683,292 pounds, down 11.1%.  The dry whey price listed at 69.42, up 1.14 cents from the week prior while sales were estimated at 5,923,192 pounds, down 27.4%.   The weekly cold storage holding report for selected storage centers estimated cheese holdings for the week ending July 7th at 92.151 million pounds, up 1.2% week over week while still 22.6% lower than during the same period last year. 

The NFDM futures settled between unchanged and 1.8500 cents lower in the July through January 2015 contracts on over 60 total trades.  The NDPSR report out yesterday afternoon posted with the NFDM price at $1.8585, down 2.08 cents, while weekly sales were projected at 22,306,200 pounds, up 15.2% week over week.
 
 
The butter market pushed lower yesterday after an uneventful spot session failed to stymy the overall bearish trend that gripped the overall dairy markets.  The July through December contracts settled between 0.125 and 3.825 cents lower on moderate trading volume.  The NDPSR butter price jumped 7.40 cents higher to $2.2823 from the week prior, with weekly sales estimated at 2,929,655 pounds, down 27%.  The weekly cold storage holding report for selected storage centers estimated butter holdings for the week ending July 7th at 21.395 million pounds, down 1.3% week over week while 11.0% higher than during the same period last year. 
We look for Class IV and Butter to open steady, NFDM higher
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