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

After a higher overnight session, a spot cheese price decline pushed futures lower on Monday. Last week’s recovery in the spot market looks as though it will be short-lived. With fresh cheese coming to the market in a seeming attempt to avoid building inventory, blocks, which have been tighter than barrels, moved more aggressively lower and put the spread inside the usual 3¢-5¢ discount. Weakness looks very likely to continue on the spot market. If the spot market continues to decline, keep an eye on the deferred Class III contracts, as they’ve been softer recently.

The March 2014 milk production report came out mostly in line with expectations and we would term this report neutral.

 Class IV futures opened the week to a mixed trade. USDA’s Cold Storage report comes out later today. Given the recent price correction, butter now seems to be a relatively quiet marketplace, but one wonders if buyers will step in. GDT prices last week were in the upper $1.60’s, which would likely be the next support area. NFDM prices were under pressure on the spot market; futures activity was light.


April 21 spot session results:

Block cheese: $2.2500 (down 3.0¢)

Barrel cheese: $2.2500 (down 0.75¢)

Grade A NFDM: $1.8575 (down 0.75¢)

Butter: $1.89 (unchanged)


Today's expectations:

• Class III, Cheese & Dry Whey to open firm

• Class IV, Butter & NFDM to open steady


Grain futures

Rains and a continued forecast for further rains this week in the parched southwestern wheat belt provided selling pressure Sunday night, and the market never really recovered from the lower open. After the close, the winter wheat condition rating came in at 34%, unchanged from last week, while corn planting remains slow at just 6% this week, but in line with expectations. We’ll be keeping a close eye on technical support levels in the coming days as wheat comes up on seasonal harvest pressure, corn may experience some planting pressure and soybeans continue to sort through Chinese cancellations and soft South American basis values.


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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