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.


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