Blocks and barrels unchanged Thursday on CME

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

A steady spot cheese market and a steady supply of largely bearish sounding news for the Class III market were thwarted Thursday by sharply higher dry whey futures prices. 

Class III held its ground, closing only pennies lower during another sub-1,000-contract trading session as dry whey prices rallied for the first time in weeks, closing between 1.75 and 2.65 cents higher from July to December on nearly 100 contracts of trading volume. What gave the dry whey market a boost?  There has been some anecdotal chatter about renewed interest in exportable dry whey ― though we’ve yet to see any rubber really hit the road.

So, Class III remains in the cross-fire between weaker spot prices, quiet demand, abundant milk supplies, on one hand, and uncertain export potential for Q3 contracts and dry whey prices that we expect to buoy some support heading into June. In the short term, we expect more Class III price weakness, but it is possible we are putting in a base at these levels with the June and July contracts still holding over their recent lows. 

Spot Session Results

Block cheese: $1.74 (unchanged)

Barrel cheese: $1.7075 (unchanged)

Grade A NFDM:  $1.68 (unchanged)

Butter: $1.54 (unchanged)

The grain complex tried to rally Thursday, but couldn’t keep the gains amid calming fears of wet weather.  The markets seem to have made the appropriate adjustment for soggy, unplanted fields for the time being.  Early estimates were for a loss of 1-2 million corn acres. By Wednesday and Thursday, that number was more like 3-4 million. We’ll wait for the June estimates, but for now we expect a loss of buy side appetite at current levels without any fresh demand news. And demand clearing prices do not seem to be of the $6.00 variety right now for December corn.

Weather forecasts have not changed much as models show another 1-2” rain for most of the Midwest over the next three to four days, followed by a quick two- to three-day break, and then another system is expected to move in from the Northwest on Tuesday. Extended outlooks have moved to normal precipitation, but anything on top of what we have is too much in the north central Corn Belt.

This morning, we look for corn to open 1 to 4 cents higher and beans 6 to 10 higher.

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