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

Class III futures opened slightly lower and traded quietly before rallying into a better spot cheese market. With gains in both blocks and barrels, the Class III market managed to stabilize, becoming mixed in front months, but still generally negative in 1H 2015 contracts. Markets picked up following USDA’s Cold Storage report and into the overnight.

We expect to see barrel cheese come to the exchange as manufacturers try to move inventory, while blocks will remain tight. This could give the cheese and Class III markets a near-term lift. On the back of a Cold Storage report that was bullish for cheese, we should see that scenario play out.

It is interesting that the market had no real reaction to a bearish Milk Production report on Monday, so there could still be some underlying support for domestic pricing. Only time will tell, and we will remain longer-term bears of these markets given the global fundamental environment.

Dry Whey futures finished mixed, and we could see the November contract fade below 60¢/lb.

The spot butter market settled down 4.25¢, to $1.99/lb., with only one trade. Cream is reported to be readily available and flowing into butter churns. Ingredient buyers are looking at importing butterfat as global prices are still substantially lower going out into 2015.  

The spot NFDM market settled unchanged at $1.31/lb.  Futures traded unchanged going out into the Q1 2015, settling lower for the remainder of 2015.

 

Oct. 22 spot session results:

Block cheese: $2.3700 (up 4.5¢)

Barrel cheese: $2.0700 (up 3.5¢)

Grade A NFDM: $1.3100 (unchanged)

Butter: $1.9900 (down 4.5¢)

 

Today's expectations:

• Class III to open higher

• Cheese to open lower

• Dry Whey to open mixed

• Class IV futures to open mixed

• Butter futures to open steady to higher

• NFDM futures to open steady to mixed

 

Grain futures 

Corn and soybeans finished lower. Clear weather should allow farmers to return to the fields. 

Weather (rain) has been a major factor in the price strength recently, as harvest has been delayed.  Many farmers have been and will continue to allow their corn to dry in the field, as recent cash prices aren’t conducive to adding the extra cost of mechanical drying.

Soybeans have been trading like a bunch of 18 year olds on vacation in Cancun. Harvest has been delayed and will get back into full swing later this week. The cash market is expected to get slammed as harvest moves past the 50% mark.

 

Today’s expectation:

• Grains to open steady to lower

 

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