Editor’s note: This market commentary is provided by the Dairy Division at FCStone in Chicago, Ill.
The Class III futures finished off the week with the 2013 contracts finishing mostly lower as over 1,100 trades took place. The May contract remained unchanged for the day, while the remaining contracts settled between 2 to 43 cents lower. The selling pressure was sparked, in part, by the losses posted in both the spot blocks and barrels. The Memorial Day holiday, coupled with school closings across the nation for summer break, is leading to a significant uptick in the availability in manufacturing milk supplies, applying pressure to prices.
Milk production in the central U.S. is mixed due to feed issues. Recent rains over the past week have limited access to pastures, while some producers are changing feed rations which will adversely affect output. In the Northeast, production is nearing its seasonal peak as weather conditions have been near ideal in most areas. The Mid-Atlantic region is considered to be just past its seasonal peak, while Florida is on the decline due to increasingly hot and humid conditions. Out West, Southern California is thought to be producing at near-peak levels, while Northern California lags at a slight delay. Arizona is thought to be past its peak, as cow stress is inching higher as temperatures climb. In the Pacific Northwest, output is building to a peak and is running at above year-ago levels.
Spot Session Results
Block cheese: $1.7525 (down 0.5 cent)
Barrel cheese: $1.7225 (down 0.75 cent)
Grade A NFDM: $1.68 (unchanged)
Butter: $1.555 (unchanged)
The grain markets finished the week with mixed results as old crops fell lower, while new crop corn and soybeans inched higher. The July corn contract settled 4 ¾ cents lower to the price of $6.57 ¼, while the December contract added 1 ¾ cents to the price of $5.36 ½. The July soybean contract closed out the week at $14.76 ¼, down 23 ¼ cents, while the November beans added 4 ¾ cents to $12.47 ¾.
Active plantings last week took place prior to rain settling in across much of the Corn Belt over the weekend. Some market participants are concerned over the record slow planting rates and the switch of corn acres to beans, yet these rains are also viewed as beneficial to crops already in the ground. The corn market is now switching to weather-driven.
We look for corn to open 2 to 7 cents higher and beans to open 10 to 14 higher.
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