Class III futures push higher

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

After an up-and-down day, Class III futures pushed higher yesterday, driven in part by yet another overall bullish round of GDT auction results. 

The Class III futures settled the day with prices ranging from 3 to 15 cents higher as over 1,200 contracts changed hands. The all-contracts GDT TWI increased by 0.6 percent, as declines in the later-dated contracts offset much of the gains seen within those of a closer expiration. The all-contracts AMF, butter, Cheddar SMP and WMP prices all sit solidly above the $2.00, helping to spur our domestic dairy price rally. The strength in the GDT continues to be rooted in the declining milk production rate of New Zealand which, despite recent heavily rains, looks to continue to disappoint heading into their season’s end.

As both Oceania and European milk production continues to struggle on weather-related conditions, the global dairy marketplace will continually look to U.S. based products to offset production woes, supporting prices for the near term. 

Spot session results:

Block cheese: $1.87 (unchanged)

Barrel cheese $1.7575 (down 1 cent)

Grade A NFDM: $1.785 (up 0.5 cent)

Butter: $1.77 (up 1 cent)

In the grain complex, turn-around Tuesday was in full effect yesterday as the futures contracts in general stabilized after Monday’s steep sell-off. The May corn contract climbed 16 ½ cents to $6.63 ¼, while the December (new crop) corn contract added 8 ½ cents to settle at $5.40 ¾. The Nov13 soybean contract tested support near the $12.00 level before climbing into settlement to close out up 11 ¾ cents at $12.18 ½. 

The slow planting progress to start the season has provided some underlying support for the grains as forecasts call for more rains this week throughout the Corn Belt accompanied by cooling temperatures. The confirmed cases of foot-and-mouth in cows in China, in addition to the bird flu cases, has added unease in the marketplace in regards to continuing Chinese import demand, while the continually high domestic soybean crush rate weighs on U.S. ending stock projections, with both set to play against one another in the upcoming USDA supply and demand report released on May 10.

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