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

Despite early indicators to the upside, Class III futures were pressured lower yesterday by spot cheddar block prices. And while barrels managed to hold steady, selling pressure on the Class III market rippled out through the middle of 2015, with the September 2014 contract finishing 21¢ lower, at $22.43/cwt.

Bearing in mind the strength of the market in recent sessions, this is more likely a slight correction rather than a larger reversal of trend, and further weakness could be incurred before any technical damage would be sustained. The market will be closely monitoring today’s USDA Milk Production report for fresh news.

Cash settled cheese futures reacted to the soft spot session with mixed sentiment, as nearby contracts were pressured into the red, while deferred months caught a bid and posted gains.  

The dry whey market saw sell side interest in nearby contracts and traded mixed through the first quarter 2015, on moderate volume.

Class IV futures took cues from the softer butter and NFDM spot activity, trading sharply lower.

Spot butter backed off its aggressive upside movement and pulled back from its fourth highest posted price on record. The futures market did not take the lower price action as a sign of sustained weakness, posting solid gains through 2014. 

NFDM futures continue to plumb the depths in search of a bottom. Today’s Global Dairy Trade (GDT) auction could provide further indications where prices will be headed.


August 18 spot session results:

Block cheese: $2.1850 (down 3.5¢)

Barrel cheese: $2.2100 (unchanged)

Grade A NFDM: $1.3750 (down 2.25¢)

Butter: $2.6350 (down 2.5¢)


Today's expectations:

• Class III & Cheese to open slightly lower

• Dry Whey to open lower

• Class IV to open lower

• Butter to open mixed

• NFDM to open slightly lower


Grain futures 

Grains markets traded with mixed results to open the week. The corn market was unable to hold onto early gains, and soybeans firmed to higher closes.   

Today’s expectation:

• Grains to open lower across the board

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