A turn-around in price direction on light volume is not ordinarily indicative of true changes in trends. Sources suggest that it is still much easier to procure cheese product than it was a month ago. Buyers have the upper hand at the moment. We suspect there is still more cheese to come to market. Futures prices are simply consolidating, coiling like a snake in preparation to strike. Weekly cheese stocks (cold storage holdings) did little to alter the picture; they were insignificantly lower by 0.5 percent to 126,351.
Cheese futures trading was even lighter than was Class III with just three contracts traded all day yesterday. This makes two consecutive days of light volume and recently three consecutive days of light volume have been followed by big spikes of activity, so watch out and keep your eyes peeled.
Class IV prices remained under in declining mode either steady, 10 or 20 lower on just 20 trades. Powder is stagnating and butter is choppy; this leaves Class IV without a clear direction and given it is at historically elevated levels you know we are more susceptible to price breaks on nervousness than rallies.
Overnight activity saw four trades by late evening; prices were 4 to 13 higher; even many months without trade activity were higher on bids alone. By the morning, we had traded 28 contracts in total and prices were 2 to 10 higher.
We look for a slightly firm open.
The grain markets experienced a mixed day with spread trading a key influence ahead of Friday’s USDA report. Estimates for Friday’s report are included below. Today’s activity saw soybeans trade sharply higher and for a while corn was sharply lower as profits were being taken on corn vs. soybean spreads, old crop corn vs. new crop corn and old crop soybeans vs. new crop soybeans.
We see little in terms of a trading opportunity ahead of the report and would doubt that any major changes will be seen but with the USDA you never know. It is likely that a reminder of how tight the carryouts are should provide another boost. However, we do see funds frequently take moderately bullish reports as an opportunity to take some profit, so we need to be cautious. Later this morning we will get the export sales report and it will be interesting to see if corn can keep up the strong recent pace, trade is looking for a bit of a slowdown this week.
The overnight markets have been mostly stronger. We look for corn to open 6 to 8 higher, beans to 4 to 6 higher, meal to open 1 to 2 higher, and for wheat to open 4 to 7 higher
Spot market prices:
Block Cheese: $1.5775 (no change)
Barrel Cheese: $1.5225 (no change)
Butter: $1.9725 (up ¼ cent)
Grade A NFDM: $1.67 (no change)
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