Editor’s note: This market commentary is provided by the Dairy Division at FCStone in Chicago, Ill.
Class III markets emphasized the choppy tone as of late yesterday with futures ending the day mixed. Class III was a bit firmer in the nearby months with Q4 futures settling +9 to +12, while deferred contracts settled anywhere from -5 to +2. The cash market did little to spur activity (584 contracts traded) with both blocks and barrels settling unchanged with no trades, bids or offers left on the board. Currently, the 2014 pack is at $16.79, trading in a fairly tight 15-cent range for most of September.
After several weeks of cheese prices climbing, the market seems to be displaying some “cracks” with prices falling off recent highs. However, this is still a far cry from a year ago. If you recall, prices hit the $2.00 mark on Sept. 20, 2012, and held until Nov. 7. Even as we hear of tight milk supplies, healthy exports and decent demand, heavy inventories have tempered any gains. The volatility we saw in August seems to have dissipated, along with heat concerns and questions surrounding Oceania production. With fundamental news mixed, we can expect this “tug-o-war” to continue, in the short term, with the potential for some further gains attributed to holiday demand.
Spot session results:
Block cheese: $1.7825 (unchanged)
Barrel cheese: $1.745 (unchanged)
Grade A NFDM: $1.845 (unchanged)
Butter: $1.605 (unchanged)
The grain markets finished mixed yesterday, as well, with December corn down 4 ½ cents and November beans gaining slightly on the day, up 4 ¾ cents. The best description of the activity was likely as simple as a “turnaround Tuesday.” Cooler weather and some recent rains have been beneficial for late-planted crops. Nationally, 55 percent of the corn crop is rated in good condition, up slightly from 53 percent, while soybeans remained essentially unchanged with 50 percent rated as good. Corn harvest reports continue to show better-than-expected yields as the harvest pace hastens.
This morning, we look for corn to open 1 to 3 cents higher and beans 3 to 7 higher.
The trading of derivatives such as futures, options, and swaps may not be suitable for all investors. Derivatives trading involves substantial risk of loss, and you should fully understand those risks prior to trading. Any reference to past performance is not indicative of future results. All references to futures/options trading are made solely on behalf of FCStone, LLC. All references to swap execution and bi-lateral swaps are made solely on behalf of INTL Hanley, LLC. FCStone, LLC will clear swaps when applicable. Swaps are only available to eligible counterparties. All observations of economic, political and/or market conditions are not intended to refer to any particular trading strategy, promotional element or quality of service provided by INTL FCStone Inc. and its subsidiaries and should be construed as market commentary. All recommendations to buy or sell a specific derivative or forecasting statements regarding market activity and the pricing thereof should be construed as a solicitation in any jurisdiction in where such an offer or solicitation would be legal. Proper context and guidance including but not limited to the particular trading objectives, financial situations and the needs of the intended audience were taken into consideration when this recommendation was prepared. Contact your account representative for specific advice to meet your specific trading preferences or goals. These materials represent the opinions and viewpoints of the author, and do not necessarily reflect the viewpoints and trading strategies employed by INTL FCStone Inc. and its subsidiaries. Sources of information believed to reliable were used in preparing such observations, and no guarantee or representation regarding the accuracy of those sources has been made. INTL FCStone Inc. and its subsidiaries are not responsible for any redistribution of this material by third parties, or any trading decisions taken by persons not intended to view this material.