Dairy markets: In search of equilibrium

 Resize text         Printer-friendly version of this article Printer-friendly version of this article

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

Class III futures traded all over the map once again yesterday, as the market continues to attempt to find equilibrium between seasonal bearishness, softening international prices, decent domestic and export demand and a flush season that has yet to bring on the “wall of milk” many had expected. The recurring theme is for nearby months to show strength when spot is bid, and for deferred months to lag. The second half of the year has started to turn over, as short-term support levels have been breached, and the longer term levels are being threatened. This continues to suggest that lower prices are on the horizon. Cash settled cheese futures mirrored the action in Class III, with gains in nearby contracts and softer prices in the second half of 2014. Dry Whey futures continue to trade firm, in the upper channel of its recent range. We are not suggesting a breakout, but the firm undertones to this market are likely indicative of the relative tightness in cheese and lackluster production numbers.

It was a relatively quiet session for Class IV, NFDM and butter, as the market is digesting consistently soft GDT results, a weaker spot market, a slowdown in demand, and holiday trade. It is interesting to note that there was considerable after-hours trading in NFDM that saw the volume nearly double after the closing bell, and nearby prices came under pressure. The April contract traded to within 0.5¢ of a limit down, with May, June and July taking heat as well.

 

April 16 spot session results:

Block cheese: $2.2225 (up 2.5¢)

Barrel cheese: $2.1875 (up 2.0¢)

Grade A NFDM: $1.89 (down 2.0¢)

Butter: $1.89 (down 1.0¢)

 

Today's expectations:

• Class III, Cheese & Dry Whey to open mixed

• Class IV & Butter to open steady

• NDFM to open lower

 

Grain futures

Grains traded mixed yesterday, with both corn and wheat coming under selling pressure, while soybeans continued to march higher. The corn trade seems range bound for the short term, with supportive fundamentals not enough to push prices higher than current levels, at least until the weather picture comes into clearer view.

 

Today’s expectation:

• Grain complex to open higher

 

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

 

The trading of derivatives such as futures, options, and swaps may not be suitable for all investors. Derivatives trading involves substantial risk of loss, and you should fully understand those risks prior to trading. Any reference to past performance is not indicative of future results. All references to futures/options trading are made solely on behalf of FCStone, LLC. All references to swap execution and bi-lateral swaps are made solely on behalf of INTL Hanley, LLC. FCStone, LLC will clear swaps when applicable. Swaps are only available to eligible counterparties. All observations of economic, political and/or market conditions are not intended to refer to any particular trading strategy, promotional element or quality of service provided by INTL FCStone Inc. and its subsidiaries and should be construed as market commentary. All recommendations to buy or sell a specific derivative or forecasting statements regarding market activity and the pricing thereof should be construed as a solicitation in any jurisdiction in where such an offer or solicitation would be legal. Proper context and guidance including but not limited to the particular trading objectives, financial situations and the needs of the intended audience were taken into consideration when this recommendation was prepared. Contact your account representative for specific advice to meet your specific trading preferences or goals. These materials represent the opinions and viewpoints of the author, and do not necessarily reflect the viewpoints and trading strategies employed by INTL FCStone Inc. and its subsidiaries. Sources of information believed to reliable were used in preparing such observations, and no guarantee or representation regarding the accuracy of those sources has been made. INTL FCStone Inc. and its subsidiaries are not responsible for any redistribution of this material by third parties, or any trading decisions taken by persons not intended to view this material.



Comments (0) Leave a comment 

Name
e-Mail (required)
Location

Comment:

characters left


Grand L60 Series

Kubota’s Grand L60 Series combines a higher level of luxury with outstanding productivity never before seen in this class of ... Read More

View all Products in this segment

View All Buyers Guides

)
Feedback Form
Leads to Insight