Block cheese unchanged at $1.64 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.

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)

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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