Editor’s note: This market commentary is provided by the Dairy Division at FCStone in Chicago, Ill.
The Class III futures market began the day mixed, but a continued push from spot cheese buyers meant Class III was quickly off to fresh highs. September through December 2014 volume was very strong, finishing the day 28¢ to 44¢ higher. 2015 contracts finished mixed, but mostly higher.
It’s hard to say when this spot cheese runaway train will be stopped, but we’ve heard rumors of cheese is headed into the United States, as well as a pushback on U.S. exports. September 2014 through January 2015 Class III vs. Class IV spreads now carry more than a $1.00/cwt. premium, so expect to see more fresh milk making its way into the Class III stream in the coming weeks.
Cheese futures were higher, in line with Class III, but saw slightly lower volume. Whey futures remain relatively quiet.
NFDM prices traded to a higher close yesterday, as the spot market fell below $1.30/lb., but recovered to finish unchanged. Class IV futures traded mostly lower on the day, following butter, despite continued gains seen in the NFDM futures contracts.
August 26 spot session results:
Block cheese: $2.2900 (up 2.5¢)
Barrel cheese: $2.3000 (up 4.0¢)
Grade A NFDM: $1.3000 (unchanged)
Butter: $2.7550 (down 2.50¢)
• Class III to open slightly lower
• Cheese to open mixed
• Dry Whey to open steady
• Class IV to open mixed
• NFDM to open higher
• Butter to open mixed
Grain prices had a relatively quiet session, finishing with a mixed close. September soybeans continue to get pummeled. Corn has challenged recent lows and recovered, perhaps setting the stage a moderate rally.
• Corn to open steady to lower
• Soybeans to open higher
The trading of derivatives such as futures, options, and swaps may not be suitable for all investors. Derivatives trading involves substantial risk of loss, and you should fully understand those risks prior to trading. Any reference to past performance is not indicative of future results. All references to futures/options trading are made solely on behalf of FCStone, LLC. All references to swap execution and bi-lateral swaps are made solely on behalf of INTL Hanley, LLC. FCStone, LLC will clear swaps when applicable. Swaps are only available to eligible counterparties. All observations of economic, political and/or market conditions are not intended to refer to any particular trading strategy, promotional element or quality of service provided by INTL FCStone Inc. and its subsidiaries and should be construed as market commentary. All recommendations to buy or sell a specific derivative or forecasting statements regarding market activity and the pricing thereof should be construed as a solicitation in any jurisdiction in where such an offer or solicitation would be legal. Proper context and guidance including but not limited to the particular trading objectives, financial situations and the needs of the intended audience were taken into consideration when this recommendation was prepared. Contact your account representative for specific advice to meet your specific trading preferences or goals. These materials represent the opinions and viewpoints of the author, and do not necessarily reflect the viewpoints and trading strategies employed by INTL FCStone Inc. and its subsidiaries. Sources of information believed to reliable were used in preparing such observations, and no guarantee or representation regarding the accuracy of those sources has been made. INTL FCStone Inc. and its subsidiaries are not responsible for any redistribution of this material by third parties, or any trading decisions taken by persons not intended to view this material.