Dairy markets: USDA grain reports due Monday

 Resize text         Printer-friendly version of this article Printer-friendly version of this article

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

The weakness in Class III was short-lived, as the market made some slight gains yesterday. While 2014 did show some strength, deferred contracts moved slightly lower in most months. Currently, the July through December 2014 pack is trading near its high at $21.31/cwt. The 2015 pack is trading at $18.42/cwt.

Dry whey futures settled steady throughout 2014 on rather light volume, while the 2015 futures settled mixed. July-September 2014 and July-December 2014 packs are trading just off  recent highs. While we should expect to see some price increases along seasonal lines, supplies are increasing. 

While butter futures continue to trade at a bit of a discount to spot, we must remember that although stocks are 51.4 million lbs. below the 5-year average, both 2012 and 2013 saw stock levels near or at record levels, perhaps skewing that average just a bit. Although butter is not abundant, we do have at least 30 days of supply on hand.  The most recent Cold Storage report reflected a stronger-than-expected increase in stocks, along seasonal lines.

NFDM news continues to be mixed on the supply side.

 

June 26 spot session results:

Block cheese: $2.0400 (up 1.5¢)

Barrel cheese: $2.0500 (up 0.75¢)

Grade A NFDM: $1.8075 (down 1.75¢)

Butter: $2.3575 (up 0.75¢)

 

Today's expectations:

• Class III, Cheese & Dry Whey to open steady to mixed

• NFDM & Class IV to open mixed

• Butter to open steady

 

Grain futures

The grain complex has become more quiet this week, with excellent growing conditions leading to a bearish outlook. Still, price losses have been somewhat limited ahead of next Monday’s Quarterly Stocks report.  The report is viewed as a “high risk” because USDA can, and often does, serve up surprises. While it is hard to make a bullish case for corn – and even harder for soybeans/soybean meal – we do make a case for owning some level of price protection ahead of these reports depending on your individual situation.  When the debate is 166 or 168/bu. yields for corn or 44 or 46/bu. for soybeans, it is easy to become complacent and expect weaker prices. At this point, we expect weaker prices – but we’ll protect against the higher.

 

Today’s expectation:

• Grains to open mixed

 

FC Stone's annual two-day Dairy Outlook Conference begins today in Chicago. Visit www.intlfcstone.com/events for information.

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.



Comments (0) Leave a comment 

Name
e-Mail (required)
Location

Comment:

characters left


5E Series

Introduced in 2013, the new 85 and 100 hp John Deere 5085E and 5100E feature 4-cylinder Interim Tier 4 emissions-compliant ... Read More

View all Products in this segment

View All Buyers Guides

)
Feedback Form
Leads to Insight