Editor’s note: This market commentary is provided by the Dairy Division at FCStone/Downes-O'Neill in Chicago, Ill.
While there remains some caution in the market as participants wait to see when cheese sellers will return, it was the spot butter market that inspired slightly firming prices in Class III yesterday. Commercial buyers who are looking for coverage appear to be the buyers across the board, but primarily in the very uncertain — and seemingly undervalued — second half of the year.
This is retail promotion season, and with the heat we’ve had throughout the country lately many are worried it could get real hot and impact production. Still, the fact remains that currently we have a glut of milk; we remain current fundamental bears, but cautious of pop capabilities. Those who subscribe to the grain/milk correlation theories will also see bullish arguments on that with strong feed prices on the board. We are actively recommending hedging strategies that allow some wiggle room in price. Call for suggestions.
In the grain complex, beans continue to lead a rally and support the other grain markets from significant slippage, as talk of an acres fight gets some traction.
We look for corn to open 3 to 5 cents higher and for beans to open 10 to 13 higher.
Daily CME spot market prices:
Block cheese $1.5075 (unchanged)
Barrel cheese $1.5525 (unchanged)
Butter: $1.5075 (up 1 cent)
Grade A NFDM: $1.2675 (unchanged)
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., International Assets Holding Corporation, 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.