Dairy markets: Deer, Roadrunner and gorilla

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

Class III futures posted mixed results after the spot cheese session remained unchanged. The May contract continued to show some strength and lead the way to the upside, picking up a dime to close at $22.36/cwt. As time moves on here, the market tide is beginning to feel like a shift could be in play. A “deer in headlights” moment may be on the horizon or, possibly a better comparison would be when the Roadrunner has realized he just overran the edge of the cliff and pauses momentarily in midair as he peers down at the gorge below him. Either way, upticks in production out West, an eventual spring flush in the Midwest, and strong European production will likely bring fresh cheese to market sooner, rather than later.

Class IV futures are looking a bit vulnerable to downside risk at current levels, and traded with a defensive tone yesterday. The market continues to receive mixed signals, but the overall tone is soft, with butter starting to edge lower and NFDM assuming the role of the 500-lb. gorilla in the room.

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

 

April 2 spot session results:

Block cheese: $2.3850 (unchanged)

Barrel cheese: $2.25 (unchanged)

Grade A NFDM:  $1.9975 (unchanged)

Butter: $1.9850 (down 2.5¢)

 

Today's expectations:

• Class III, Cheese & Dry Whey to open firm

• Class IV to open steady to lower

• Butter & NDFM to open mixed

 

Grain futures

Grain markets were awash in a sea of red as funds took profits and trimmed down their long positions ahead of export numbers to be released this morning. May corn lost 11.75¢; May soybeans lost 22.25¢. Despite the losses, the fundamental drivers of these markets are still intact, taking cues from fund activity, weather, exports and the balance sheet.

 

Today’s expectation:

• Grain complex to open firm

 

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