Block cheese down a penny on CME

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

The downward slide on Class III futures continued Tuesday as light volume early-on saw futures down double-digits in nearby contracts prior to the spot cheese trade.

The spot market continued to see multiple sellers, and they kept the downside pressure on Class III futures as the block dropped by a penny and the barrel fell by 2.5 cents. Though volume remained light, totaling just 715 trades on the day, prices continued to fall and June finished the day down 23 cents; July down 17; Aug down 13, and other months mostly lower but mixed from +2 to -10.

Activity does seem to be a bit on the slow side this week as the market participants seem to be stepping to the sidelines now that we’ve corrected the wide block/barrel spread as they attempt to determine the direction of the next move.

A slow grind to the downside has been seen in the international markets over the past few weeks, and that continued in the EU, according to our weekly report. It seems the story is much the same there as it is in Oceania with a softening market but a tight supply and demand keeping participants on their toes. Supply is better domestically, but most participants seem to agree it won’t take much of an increase in demand or a slowdown in milk production to throw our markets out of balance.

Spot Session Results

Block cheese: $1.76 (down 1 cent)

Barrel cheese: $1.73 (down 2.5 cents)

Grade A NFDM:  $1.68 (unchanged)

Butter: $1.595 (unchanged)

In the grain complex, sharply lower prices turned mixed as the day saw things slowly grind their way higher. Spreads continue to trade actively and be very volatile. Yesterday, it was old crop corn falling, down 9.5 cents in July to 640, while new crop prices pulled out of the early hole to close unchanged at 520.25. Meanwhile, July beans finished 13.75 higher to 1478.25, while new crop November closed down 4.25 at 1220.75.

With planting mostly expected to wrap up over the coming week to 10 days, all eyes are likely to look ahead to summertime weather. 

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