Block cheese closes at $1.6025 on CME

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

Class III settled anywhere from +2 to -8 with 713 contracts trading on the day. While the cash market once again saw a move higher, the response in Class III has been rather lackluster the past few sessions. That being said, the second-half pack is currently trading just slightly off its March highs at $18.47, breaking what had been a steady move upward for most of the month of March.

With lack of fresh fundamental news and being on the cusp of spring flush, one can expect that we will see some sideways momentum in the short term. However, uncertainty about the economy seems to be growing with a number of articles over the past few days/weeks discussing the possibility of a 2007 type top in equities and the growing disconnect between equities levels and the growth in the global economy. In addition, gasoline prices are climbing and consumers’ disposable incomes have taken a hit the last few months ― first with payroll deductions and most recently with some feeling the sting of the sequestration. Currently, we are hearing that cheese production is steady out West, demand is decent, and manufacturers in the East and Midwest are able to keep up with the robust production. The lull in activity as of late is not surprising as its participants regroup prior to the flush.

Spot session results: 

Block cheese: $1.6025 (up 0.25 cent)

Barrel cheese $1.5825 (up 0.25 cent)

Grade A NFDM: $1.4975 (unchanged)

Butter: $1.63 (unchanged)

In the grain complex, both May corn and May soybeans saw gains on Monday. May corn settled up 7 ¾ cents while May beans settled up 8 ½ cents. With the March 28 stocks report right on the horizon, the market may be anticipating corn feed use to be well above that projected in the revised USDA figures. An implied second-quarter feed use near what we saw last year could easily project usage 200-300 million bushels above current USDA forecasts. As with corn, some concern that the March 28 stocks report will reiterate near record domestic U.S. supply tightness has helped spur an upward move as the market bounced from technical support. 

This morning, we look for corn to open steady to 2 lower, soybeans 8 to 12 lower.

These data and comments are provided for information purposes only and are not intended to be used for specific trading strategies. Commodity trading is risky and FCStone Group, Inc., INTL FCStone Inc., and their affiliates assume no liability for the use of any information contained herein. Although all information is believed to be reliable, we cannot guarantee its accuracy and completeness. Past financial results are not necessarily indicative of future performance. Any examples given are strictly hypothetical and no representation is being made that any person will or is likely to achieve profits or losses similar to those examples. References to and discussions of exchange traded products are made solely on behalf of FCStone, LLC. References to and discussions of OTC products are made solely on behalf of INTL Hanley, LLC, and OTC products are only available to eligible counterparties.

 



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