Dairy markets: More noise today?

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

Class III futures picked up right where they left off last week, trading sharply higher ahead of the spot session, with limit-up moves for all 2Q 2014 months. The market is clearly on edge and trading sporadically of late. The 2H 2014 futures averaged $19.68/cwt., a gain of 35¢ on the day. We’re nearing the $20.00/cwt. mark, which is likely to be an extremely attractive level for dairy producers, and likely will bring in some heavy resistance with producers selling and looking to potentially do $18.00 puts vs. $22.00 call min-max structures. While the short-term strength seems very likely to continue, the market is likely on pins and needles with spot at a record high price, GDT due out later this morning and two USDA reports (Milk Production and Cold Storage) later in the week.

While the Class III market was sky rocketing, the Class IV market was very quiet ahead of today’s GDT event. NFDM was hesitant to make a move to open the week, and all eyes will be on WMP/SMP prices during this morning’s GDT auction. A bounce back or even unchanged prices would like be enough to push futures higher given the significant move made in the Class III market in recent sessions. But further weakness likely increases the anticipation of a pullback in prices across the board. It seems unlikely to be a quiet session.

FC Stone's annual Dairy Outlook Conference will be held June 18-19, in Chicago. Visit www.intlfcstone.com/events for information.

 

March 17 spot session results:

Block cheese: $2.40 (up 3.75¢)

Barrel cheese: $2.3050 (up 4.25¢)

Grade A NFDM:  $2.04 (unchanged)

Butter: $1.90 (down 2.0¢)

 

Today's expectations:

• Class III to open mixed

• Cheese to open mixed

• Dry Whey to open mixed

• Class IV, Butter & NFDM to open quiet, with early direction set once the GDT is released.

 

Grain futures

Corn prices finished near their lows of the day at $4.79/bushel for May and $4.82/bushel for December. Soybeans opened lower but closed slightly higher as continued interest from China supported the market.

 

Today’s expectation:

• Grain complex to open higher

 

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