Editor’s note: This market commentary is provided by the Dairy Division at FCStone in Chicago, Ill.
Class III futures again saw a rally yesterday with futures settling anywhere from +1 to +25 on the day. Since Nov. 20, the January contract has gained nearly 81 cents to settle at $17.97 ― within only 3 cents of the $18.00 mark. While January saw the biggest gains on the day, it looks as if there is a bit short covering coming into play in conjunction with some technical strength. As 2013 comes to an end in the next few weeks, it looks as if the Class III price will have bottomed out in March at $16.93 with the peak in November at $18.80.
Spot session results:
Block cheese: $1.88 (unchanged)
Barrel cheese: $1.775 (unchanged)
Grade A NFDM: $2.00 (unchanged)
Butter: $1.64 (down 1 cent)
Corn futures settled up slightly, 1 ¼ cents as values moved lower midday with traders concerned over further China corn import issues. As rumors swirl, there is talk of three cargoes being rejected over GMO issues. Also, there is talk of China banning state stockpilers from purchasing imported corn and beans to safeguard against any GMO risks. Futures are trading at 39-month lows as a result of the burdensome U.S. supply. Jan beans saw double-digit losses yesterday to settle down 15 ¼ cents. Weekly export inspections slowed to 52.6 million vs. 67 million last week and 52.4 million a year ago. Total first quarter U.S. soybean exports are now estimated near 650 million bushels. Skittishness seems to be at play here surrounding Chinese buying with trade being influenced by the slightest of rumors surrounding a ban. Traders are also becoming more concerned surrounding tensions in the South China Sea. South American growing conditions are generally favorable with active rains forecast for Brazil.
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.