Dairy markets: Class III ‘correction’ continues

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

The correction off recent price highs continued yesterday, with Class III contracts settling anywhere from unchanged to down 27¢ (October 2014).

Spot Cheese went to another hard close, as physical traders still look for product to pick up off the exchange. Blocks settled up 2¢ on 6 trades, to $2.32/lb. On the other hand, barrels were bid higher without any trades, up 2.5¢ to settle at $2.3250/cwt. This left us back in an inverted market again, and left traders ultimately without definitive direction. Cheese futures ended the day mixed. With steady volume, we may be seeing participants layer in a little upside on the 2015 contracts. Domestic fundamental tightness is still on everyone’s mind, despite the bearishness on international prices. Whey futures were more active, and that activity was mainly lower.

A bounce in butter and NFDM, both on very strong trading volumes, lent some support to the Class IV market. The 4Q 2014 pack average gained 13¢ to settle at $20.11/cwt.; the 1Q 2015 pack gained 6¢, to $17.65/cwt. Spot butter made a small gain; butter futures on the other hand made significant gains. We could see more of a sideways to higher trade here as we move into the weekend, even though international prices continue to move lower. 

August 28 spot session results:

Block cheese: $2.3200 (up 2.0¢)

Barrel cheese: $2.3250 (up 2.5¢)

Grade A NFDM: $1.3250 (up 0.25¢)

Butter: $2.7500 (up 1.0¢)

 

Today's expectations:

• Class III to open lower

• Cheese to open lower

• Dry Whey to open mixed

• Class IV, Butter and NFDM to open higher

 

Grain futures 

Higher-than-expected export numbers for soybeans gave a little shot in the arm to traders yesterday, keeping the market on a positive note throughout the session. Corn exports also came in on the higher end of expectations, but did not have an initial effect.

 

Today’s expectation:

• Corn to open steady to higher

• Soybeans to open higher

 

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