Editor’s note: This market commentary is provided by the Dairy Division at FCStone in Chicago, Ill.
Class III contracts fell victim to the spot cheese market, as the widening of the block/barrel spread attributed to an overall bearish performance. The 1Q 2015 futures pack average settled at $17.67/cwt., down 15¢ week over week. Current fundamentals seem to be setting up for a drastically different year in 2015, yet low feed prices still allow for opportunities to protect respectable margins.
1Q 2015 cheese futures ended Friday’s trading session at $1.7857/lb., shedding 1.23¢/lb. from the Friday prior.
Dry whey futures finished out the week mixed. The majority of the gains were posted in the November through February contracts.
Class IV futures closed mixed. The 1Q 2015 futures pack closed the week at $16.90/cwt., in route to a 53¢ week-over-week decline.
NFDM futures settled lower in the November through August contracts, while the rest remained unchanged, succumbing to bearish pressures as the butter market fell lower.
Butter futures were subjected to another massive decline in the spot price, falling 13¢ on Friday, pressuring the nearby contracts lower. The 1Q 2015 butter futures pack average fell 3.975¢/lb. from the previous week.
Oct. 17 spot session results:
Block cheese: $2.2975 (up 3.75¢)
Barrel cheese: $2.0700 (down 2.0¢)
Grade A NFDM: $1.3800 (unchanged)
Butter: $2.0000 (down 13.0¢)
• Class III & Cheese futures to open mixed
• Dry Whey futures to open steady
• Class IV futures to open steady to higher
• NFDM futures to open mixed
• Butter futures to open steady to slightly higher
Grain markets were pressured lower for the most part, with harvest expected to get back into full swing due to favorable conditions. Coupled with forecasts calling for rains in Northern Brazil to alleviate dryness concerns for the area, funds stepped in to reduce their long grain positions. Informa released its acreage estimates for next year, projecting corn acreage at 87.8 million acres, down 3.1 million from this year; soybeans at 88.5 million, up 4.3 million year over year; and wheat down 394,000, to 564,000 acres.
• Corn to open lower
• Soybeans and soybean meal to open lower
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.