Editor’s note: This market commentary is provided by the Dairy Division at FCStone in Chicago, Ill.
The June Dairy Products Report, released last Friday, was bullish for the cheese and butter markets, while bearish for the NFDM and dry whey. Drought conditions in California continue to provide some bullish fodder to the markets.
Class III futures tallied just over 1,000 total trades last Friday, spurred on by bullish price action for cheddar blocks and barrels. The strongest performance was noted in the nearby contracts. The 4Q 2014 futures pack average added 19¢ (62¢ week over week), moving back above the $20.00/cwt. mark for the first time since July 1.
The 4Q 2014 cheese futures pack settled at $1.9413/lb., up 0.76¢ for the day and up 2.43¢ week over week. Domestic demand has remained unwavering in the face of continually declining international prices, underpinning both the cheese and Class III prices. Not only has demand remained strong, but there has been a pull on supplies by those utilizing cheese as an ingredient within other food products.
The Dairy Market News (DMN) bi-weekly international prices report, released July 31, displayed weakness again in the Oceania cheddar price.
The 4Q 2014 dry whey futures pack finished the week unchanged, yet tallied an impressive week over week gain of 4.1¢.
The 4Q Class IV futures pack held steady at $19.88/cwt. on Friday, while slipping 12¢ lower from the previous week.
NFDM futures saw some weakness appear in August and September contracts, while the 4Q 2014 contracts held steady.
The spot butter price shed a total of 19¢ week over week. Butter futures shook off yet another day of weakness in the spot market to tally gains in the August through November contracts.
August 1 spot session results:
Block cheese: $2.0000 (up 2.25¢)
Barrel cheese: $2.000 (up 1.25¢)
Grade A NFDM: $1.6500 (unchanged)
Butter: $2.4000 (down 4.0¢)
• Class III to open higher
• Cheese futures to open higher
• Dry Whey to open steady to higher
• Class IV to open soft
• Butter to open firm
• NFDM to open soft
Grain markets started August mixed, as the shift in weather forecasts calls for needed rains to settle over areas of the Corn Belt to start the week. Market participants will be monitoring temperatures closely over the next couple weeks as any flare up of hot, dry weather could adversely impact yields.