Dairy markets: Class III futures, blocks post gains

 Resize text         Printer-friendly version of this article Printer-friendly version of this article

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

Class III was mixed through the first half of 2014, settling anywhere from +1¢ to +22¢ on the day, while the second half settled anywhere from +1¢ to +6¢. March futures saw the biggest move, settling up +22¢, although it is still some 56¢ off its highs set a week ago. Currently the Class III 2014 pack is trading at $19.40/cwt., just 6¢ off its highs.

There's “hand to mouth” buying due to these high prices – mixed with expectations of a seasonal, post-Super Bowl slowdown. The demand picture seems to be good from an export perspective as previous sales continue to move product offshore. Internationally, Australia seems to be seeing more production problems due to excessive heat, while forage quality seems to still be a large concern preceding spring flush. Excessive dry conditions in the Western U.S. are on the forefront of many market discussions as well. 

The block price is down 2.50¢ since last Thursday, at $2.33/lb. With barrels down 2¢ yesterday, to $2.30/lb., the spread is 3¢, inside the historical range of 3¢-5¢.

The CME Grade AA butter was down 4.25¢ from last Thursday, at $1.85/lb. USDA weekly stocks were up 8.5% from the previous week, but are 19.1% below last year. Overall it seems that there is a bit of inventory rebuilding; however, cream supplies are tight. Selling activity in the butter market during January decreased from December and was below the 2013 monthly average. After bottoming out at $1.5225/lb. on Dec. 30, the price has settled into a range between $1.88-$1.90/lb. since the peak of $1.94/lb. on Jan. 22.

 

Feb. 6 spot session results:

Block cheese: $2.33 (up 0.5¢)

Barrel cheese: $2.30 (down 2.0¢)

Grade A NFDM:  $2.0175 (up 1.75¢)

Butter: $1.85 (down 3.0¢)

 

Today's expectations:

• Class III & Cheese to open slightly higher

• Dry Whey to open mixed

• Class IV & NFDM to open weaker

• Butter to open steady

 

Grain futures

Corn prices held steady on another strong week of export sales, even as China announced the canceling of 220,000 tons of corn. As of Feb. 1, US corn sales now total a record portion of projected annual exports, and the flurry has is prompting traders to consider even larger corn export potential.

Soybean values surged higher on strong export sales as well. With record South American supplies available in spring, traders continue to look for China purchases to slow. 

Today’s expectation:

Grains look to open mixed  

 

The trading of derivatives such as futures, options, and swaps may not be suitable for all investors. Derivatives trading involves substantial risk of loss, and you should fully understand those risks prior to trading. Any reference to past performance is not indicative of future results. All references to futures/options trading are made solely on behalf of FCStone, LLC. All references to swap execution and bi-lateral swaps are made solely on behalf of INTL Hanley, LLC. FCStone, LLC will clear swaps when applicable. Swaps are only available to eligible counterparties. All observations of economic, political and/or market conditions are not intended to refer to any particular trading strategy, promotional element or quality of service provided by INTL FCStone Inc. and its subsidiaries and should be construed as market commentary. All recommendations to buy or sell a specific derivative or forecasting statements regarding market activity and the pricing thereof should be construed as a solicitation in any jurisdiction in where such an offer or solicitation would be legal. Proper context and guidance including but not limited to the particular trading objectives, financial situations and the needs of the intended audience were taken into consideration when this recommendation was prepared. Contact your account representative for specific advice to meet your specific trading preferences or goals. These materials represent the opinions and viewpoints of the author, and do not necessarily reflect the viewpoints and trading strategies employed by INTL FCStone Inc. and its subsidiaries. Sources of information believed to reliable were used in preparing such observations, and no guarantee or representation regarding the accuracy of those sources has been made. INTL FCStone Inc. and its subsidiaries are not responsible for any redistribution of this material by third parties, or any trading decisions taken by persons not intended to view this material.



Comments (0) Leave a comment 

Name
e-Mail (required)
Location

Comment:

characters left


5M Series

Five M Series Models: 5065M, 5075M, 5085M, 5100M, and 5115M (65-115 hp). If you spend a lot of time on ... Read More

View all Products in this segment

View All Buyers Guides

)
Feedback Form
Leads to Insight