Editor’s note: This market commentary is provided by the Dairy Division at FCStone/Downes-O’Neill in Chicago, Ill.
Class III futures continued their decline on Tuesday as the spot markets came under pressure. The barrel market started the declines, falling to $1.6550 before a trade occurred, and the blocks fell to $1.7100 as well before any trades took place. By the close, however, prices had come off their lows with barrels coming back to close unchanged at $1.69, while blocks moved a penny off their lows to $1.7200. For a while, it looked as though prices would stay fairly stable with the bounce from the lows in spot; however; after trading steady to 5 lower for a period of time, prices in Feb and March dropped by 21 and 19 cents other 2013 months finished from 1 higher to 8 lower as volume still remains relatively light as less than 1,000 trades took place on the day. The wide block/barrel spread closing through blocks falling certainly affected the nearby months. And Feb has given up 50+ cents in just two days, leaving us questioning how much downside can remain there. We’d look for a slight bounce back today, though sell-side pressure should remain on the spot session. We have our doubts as to how much further spot prices will fall in the short term.
Spot session results:
Block cheese: $1.72 (down 4 cents)
Barrel cheese $1.69 (unchanged)
Grade A NFDM: $1.5575 (unchanged)
Butter: $1.45 (down 3.5 cents)
Grain markets continued to move mostly higher ahead of Friday’s USDA report, but a slight sell- off at the close brought the market back to mixed. The term “readjustment” comes to mind early this week, particularly in regard to the corn market. As the long-awaited report draws nearer, the market seems to be bouncing back a bit after losing some 70+ cents since the first week of December. On the day, March corn finished 3.25 cents higher at 688.75; soybeans were 2 lower to 1386.5, while wheat finished down 0.75 cents at 760.25.
This morning, we look for corn to open steady to 3 cents higher and soybeans mixed from -3 to +2.
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