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

There is not much cutting around the situation: Yesterday’s cheese activity and resulting Class III and cheese futures trade is bearish.

While a $1.90/lb. cheese market seems appropriate given the recent discussions of fresh cheese availability, we’re still working through inventory ripple effects brought about by heavy export traffic earlier this year.  And although international prices are generally weaker, there is very little patience for the potential risk of paying over $2.00/lb. at any time in the second half of this year.  In other words, commercial buyer risk avoidance is still in full effect even in light of yesterday’s rout.  This may be further evidenced by the sharp uptick in dry whey trading.

The price of butter in Chicago continues to impress bulls and terrify buyers, but futures bucked the trend yesterday.  It looks like we may have put at least a short-term top in futures, as nearby stalled out and retreated into negative territory.  We’ve been fielding calls on how far butter can go, and while it’s difficult to call a top, we anticipate only limited upside from here. With international prices well below U.S. at this time, we’re keeping our eyes and ears open for import activity, but have heard little chatter about that to-date. 


May 28 spot session results:

Block cheese: $2.0000 (down 2.0¢)

Barrel cheese: $1.9450 (down 8.75¢)

Grade A NFDM: $1.8225 (up 2.5¢)

Butter: $2.2950 (up 4.5¢)


Today's expectations:

• Class III, Cheese & Dry Whey to open lower

• Class IV, NFDM & Butter to open steady to lower


Grain futures

Grain markets bounced quietly Wednesday. There was little fresh fundamental news and trading volume was light. The 16-30 day forecast (if realized) shows favorable growing conditions, suggesting the crop rating will improve going into the first half of June. Regardless of the good weather prospects, it is our opinion that the corn market is oversold for the time of year. The soybean market is still working at balancing old crop tightness with expectations of increasing stocks for new crop. Imports are starting to show up.  Beans are still trying to buy acres, and that is keeping the near-term situation afloat.


Today’s expectation:

• Corn to open lower

• Soybeans to open higher


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


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