Editor’s note: This market commentary is provided by the Dairy Division at FCStone in Chicago, Ill.
Class IV traded mixed, caught in the crosshairs of a weaker NFDM market and a firming butter market. The NFDM situation is sluggish, with increased production of nonfat over SMP out West. Butter, on the other hand, is building steam to the upside as the cream market continues to tighten.
The 800-lb. gorilla in the room has been the ability of the dairy complex to shrug off recent price weakness on the GTD auction. Granted, NFDM has been weakest of the complex recently, but overall we’ve largely ignored an about-face of price direction in a leading global price discovery market. We’ll concede U.S. prices don’t have to move in lock-step with world prices lower, but to think there will be no impact at some point is short-sighted in our opinion.
Class III and cheese futures finished with moderate losses for the third day in a row. Consolidating recent gains with a several day reprieve is normal, especially in light of what we think was a largely neutral February milk production report.
The interesting part, however, is that slightly weaker prices occurred during continued buying interest in the spot cheese market. Slowly but surely we’ve tacked on 2.75¢ to the price of block cheese and 4.75¢ to barrel cheese since Monday.
Dry whey futures underpinned a sluggish decline for Class III. News for the dry whey in the country is largely quiet with mixed trading.
FC Stone's annual Dairy Outlook Conference will be held June 18-19, in Chicago. Visit www.intlfcstone.com/events for information.
March 20 spot session results:
Block cheese: $2.4275 (up 0.75¢)
Barrel cheese: $2.3050 (down 0.5¢)
Grade A NFDM: $2.04 (unchanged)
Butter: $1.91 (down 0.5¢)
• Class III, Cheese & Dry Whey to open mixed
• Class IV to open mixed.
• Butter & NFDM to open steady to higher.
The corn market continued in its sideways trading range, with not much in the way of news to drive the market. Comments by President Obama announcing lighter restrictions on Russian officials than many were anticipating helped move down the market, as well as the rest of the grain complex. Soybeans put in a volatile session. The trend is still to the upside, but may now start to correct as tensions abate in the Ukraine.
• Grain complex to open lower
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