Dairy markets: ‘Flush’ still slow to materialize

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

With an uptick in volume from the previous session and some lower prices on the back of another negative GDT report, we saw some softness in the Cheese and Class III markets yesterday. The Class III 3Q 2014 pack average lost 15¢ to settle at $19.87/cwt.; and the 4Q 2014 pack average shed 9¢ to settle at $18.98/cwt.

Overall GDT auction prices declined for a sixth consecutive session, but that trend appears to be slowing.

We are hearing that milk production in the Midwest and Northeast is increasing, but not to levels where we would be looking at a typical “flush” scenario. This may keep the market at least stable in the near-term, as reports of surplus milk in the system are limited and the California flush is pretty much done.

Blocks and barrels continued down yesterday, as it appears that the $2.00/lb. mark is the next price target.

With a larger decline in the U.S. Dollar, we should continue to see the export market look to the U.S. for product as opposed to other countries with higher currency values.

Action in the Class IV market has dried up over the last couple of trading sessions as the market seems to be torn between steady to lower NFDM prices and higher butter prices.

 

May 6 spot session results:

Block cheese: $2.0375 (down 3.25¢)

Barrel cheese: $2.0375 (down 1.75¢)

Grade A NFDM: $1.7775 (unchanged)

Butter: $2.1500 (up 5.0¢)

 

Today's expectations:

• Class III, Cheese & Dry Whey to open mixed

• Class IV, Butter & NFDM to open mixed 

 

Grain futures

Corn markets closed the day generally higher, with the July contract settling out at $5.175/bushel, up 9.5¢. After lower overnight markets the trade cited continued worries over delayed planting and fund action as the drivers to the market.

Soybeans continued to be soft in yesterday’s trade after overnight values in China plunged. The July contract settled out at $14.595/bushel, down 3.75¢ on the day. The talk of more beans headed to the U.S. from South America is keeping pressure on this market in the near-term.

 Crop Production and World Ag Supply & Demand Estimates reports are released May 9.

 

Today’s expectation:

• Corn & Soybeans 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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