Dairy markets: Class III futures break upward

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

If no one has issued a “small craft advisory” for the Class III futures market yet, someone should. The market looked technically poised to break out to the upside, and yesterday’s action certainly supported that sentiment. After a 0.9% uptick on the GDT auction and a spot cheese session that saw blocks gain 3¢ and barrels pick up 2.75¢, Class III futures went nuclear. The July contract put in a fresh high and closed limit up, at $21.79/cwt.; August spiked up 70¢, to $21.48/cwt., and solid gains were seen throughout the balance of 2014 and spilled over into 2015. The market will look to today’s USDA Milk Production report for direction, but the past couple of sessions have reignited bullishness in what has been a relatively stable market since the beginning of June.

Class IV resumed its upside momentum by tacking on gains from July 2014 out to January 2015, on the heels of impressive strength coming out of the butter market. Following an active spot session that saw 18 loads of butter trade and a 1¢ uptick, the futures market continued to tack on gains and soar to fresh contract highs. NFDM futures saw mixed trade following an unchanged spot session.

 

June 17 spot session results:

Block cheese: $2.0500 (up 3.0¢)

Barrel cheese: $1.9875 (up 2.75¢)

Grade A NFDM: $1.8250 (unchanged)

Butter: $2.1950 (up 1.0¢)

 

Today's expectations:

• Class III, Cheese & Dry Whey to open mixed

• NFDM to open mixed

• Class IV & Butter to open soft

 

Grain futures

The grain market continued to shed value yesterday, with double-digit losses in the soybean market, and December corn flirting with contract lows. July corn continued its slide to the downside.

 

Today’s expectation:

• Grains to open slightly higher

FC Stone's annual two-day Dairy Outlook Conference begins today in Chicago. Visit www.intlfcstone.com/events for information.

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