Editor’s note: This market commentary is provided by the Dairy Division at FCStone/Downes-O'Neill in Chicago, Ill.
Futures were mixed on Tuesday as selling entered the spot market, pushing barrels a penny lower with blocks closing unchanged on a heavy seven trades.
Reports are mixed with fluid milk softer due to the high temperatures, but excess cheese loads still reportedly available. On the day, less than 700 trades occurred with prices mostly lower in 2012 months, but sharply higher on light volume in 2013 ranging from 13 to 20 cents higher.
Short term, it seems unlikely that the market will spike higher due to the reported excess loads, but tight to negative margins for dairy producers leave concerns of supply availability moving into the 4th quarter and 2013. Perhaps if the grain market can get a price break from the report this morning, prices will ease a bit. But, for now, a lack of producer selling in 2013 is likely to keep prices moving higher out there, with end-users looking for protection and producers hesitant to sell in the face of skyrocketing input costs.
The grain markets had a day of mostly profit-taking ahead of this morning’s report on Tuesday, as December corn closed down 12.5 at 717.50 and Nov. beans closed down 9.25 at 1538.5.
It was true a few weeks ago with the plantings and stocks report, but this morning’s report likely matters little unless the rains come. Forecasts were ever so slightly improved for the SE portion of the Corn Belt yesterday, but the problem is by no means solved and 2/3rds of the belt is likely to remain dry. Perhaps the report can put some focus back on demand after the recent price surge, but we have our doubts. .
Daily CME spot market prices:
Block cheese: $1.64 (unchanged)
Barrel cheese $1.65 (down 1 cent)
Butter: $1.54 (unchanged)
Grade A NFDM: $1.2375 (up 0.75 cent)
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