Dairy markets: Class III withstands spot cheese decline

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

Class III futures prices were double-digit higher early in the day, but pulled back – albeit not too much – on a sharp drop in the spot cheese session. Class III settlements ranged from 7¢-11¢ lower from August through December. The market is seemingly tired of jumping the gun to the downside. Cheese demand has been reportedly strong in the upper Midwest, and inventories aren’t as high as some would like to see. The news in the cheese market seems to be a broken record: tight in the Midwest; available supplies out West.

The Class IV story was all about butter. The futures market exploded higher early, but spot butter failed to have any activity and futures quickly pulled back. The butter market is certainly not for the faint of heart. Class IV futures finished the day mixed.

June milk production in Australia increased by 8.9% year-over-year, and gained 0.7% over May. The surge  over those final two months drove Australia’s yearly milk production (July 2013 through June 2014) to a year-over-year increase of 0.4%.  

 

July 24 spot session results:

Block cheese: $1.9875 (down 5.25¢)

Barrel cheese: $1.9975 (down 3.5¢)

Grade A NFDM: $1.6750 (unchanged)

Butter: $2.6200 (unchanged)

 

Today's expectations:

• Class III & Cheese to open mixed

• Dry whey to open steady

• NFDM, Class IV & Butter to open steady to higher

 

Grain futures

Yesterday’s impressive export numbers did little in the way of lending support to a grain trade. Buying enthusiasm quickly eroded as farmer selling pressured the markets lower and had the entire complex trading well off their highs.

 

Today’s expectation:

• Corn to open lower

• Soybeans to open lower

 

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