Editor’s note: This market commentary is provided by the Dairy Division at FCStone in Chicago, Ill.
Class III futures rallied yesterday, with the exception of May.
Feed continues to be a concern as we move forward. We are hearing that California wheat silage is running upwards of $80/ton; corn is nearly impossible to buy; and alfalfa is running anywhere between $350 to over $400/ton. Water continues to be an issue as the drought lingers and, should El Nino bring much-needed moisture to California, it may be too late.
Feed is not only an issue in California. Many Midwestern producers are supplementing rations, with persistent cold temperatures hampering pasture growth.
What will be interesting is whether California producers move cows to other areas. Although beef prices are high, producers may be reluctant to cull cows with current milk profitability on the table, combined with reported difficulties in getting heifers.
While the feed issue is something to be mindful of in the near term, short-term concerns surrounding an abundance of supply in Europe and the lack of Chinese buying continue to weigh on the traders’ psyche amidst near-record prices in cheese.
April 29 spot session results:
Block cheese: $2.1700 (down 3.0¢)
Barrel cheese: $2.1700 (unchanged)
Grade A NFDM: $1.80 (down 0.5¢)
Butter: $1.91 (unchanged)
• Class III, Cheese & Dry Whey to open firm
• Class IV, Butter & NFDM to open higher
Corn prices moved higher yesterday after the USDA indicated only 19% of the U.S. corn crop has been planted. The cold wet pattern is expected to continue over the next week or so, with traders concerned that a significant lag may occur in planting. Soybeans moved higher as well on stocks, shrugging off record imports and cancellations by China.
• Grain complex to open lower.
FC Stone's annual Dairy Outlook Conference will be held June 18-19, in Chicago. Visit www.intlfcstone.com/events for information.
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