Dairy markets: Class III futures erode

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

 Class III futures prices eroded yesterday, with August and September contracts seeing the steepest declines. While the declines in 2015 have been tempered, the 2015 pack continues to hover near $18.00/cwt., a far cry from the $18.44/cwt. level seen in late June. 

Based on the current futures market, 2014 is set to be a record high year for Class III, with the first 10 months of the year over $20.00/cwt. Dry whey prices have been higher as well, and should add over $2.00/cwt. to the Class III milk price for all of 2014.

While higher prices are only part of the equation for producers, attention should be placed on the favorable margins producers have been seeing. Milk income over feed costs are expected to increase to near $13.76/cwt., 23¢ more than last month. The expected profitability is $5.42 above 2013 and $6.02 higher than the 2009-13 average. Although there have been some whisperings of expansions and certainly less culling, monthly production reports have yet to reflect any significant gains. 

 

July 30 spot session results:

Block cheese: $1.9750 (down 0.5¢)

Barrel cheese: $1.9475 (unchanged)

Grade A NFDM: $1.6750 (unchanged)

Butter: $2.4700 (down 5.5¢)

 

Today's expectations:

• Class III & Cheese to open slightly higher

• Dry Whey to open steady

• Class IV & Butter to open steady

• NFDM to open mixed

 

Grain futures

September corn settled up slightly for the third time in the past four sessions. Traders focused on favorable weather conditions, with temperatures expected to be at or below average.  The rains in the forecast are being viewed as "finishing rains," and the only thing left to possibly hurt the crop would be an early frost.

 

Today’s expectation:

• Corn to open lower

• Soybeans and soy meal to open mixed

 

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