Dairy markets: Crop conditions pressure grains lower

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

While Class III contracts have managed to put in higher highs over the last couple of trading sessions, the market still feels a bit weak, managing to erase those gains (in most cases) by the end of the session. The July to December 2014 pack average lost 10¢ to settle at $19.88/cwt. The July contract took the largest loss, closing at $20.40/cwt., down 38¢.

 The latest GDT report was the 8th straight negative result in the auction, and while markets were down before spot, they still appeared to take the GDT negativity with a grain of salt. 

Spot cheese had a very active session without seeing too much of an increase in price. Barrels were up 0.25¢ on 14 trades, the highest volume since Feb. 12. It appears those that require product are willing to take it at current pricing levels.

Class IV futures continued weak yesterday. The 2H 2014 pack average lost 18¢ overall to settle at $21.21/cwt. We could see a further slide if NFDM and butter markets continue to be weak.

Spot butter continued to crawl its way off recent highs; futures were generally negative all session. The general thinking is that we went too far, too fast to the upside after the last Cold Storage report.

We saw similar activity in the NFDM markets. GDT may have had a little more effect on this side, even though we did see an increase in price on the spot market. The next couple of sessions will let us know if this is a change in trend. 

 

June 3 spot session results:

Block cheese: $1.9750 (up 1.25¢)

Barrel cheese: $1.9350 (up 0.25¢)

Grade A NFDM: $1.8575 (up 1.25¢)

Butter: $2.2600 (down 2.0¢)

 

Today's expectations:

• Class III & Cheese to open steady to slightly higher

• Dry Whey to open firm

• Class IV & NDFM to open steady to higher

• Butter to open steady to lower

 

Grain futures

Grains could not continue to rally from the previous session because of good crop progress numbers and generally ideal current and forecasted growing conditions.

USDA rated the corn crop condition as 76% good to excellent. It will be hard to keep prices up, but it will be hard to move the July corn market past the psychological level of $4.50/bushel.

July soybeans also took the good planting numbers and favorable growing conditions to heart and moved to the downside.

 

Today’s expectation:

• Corn to open higher

• Soybeans to open higher

FC Stone's annual Dairy Outlook Conference will be held June 18-19, in Chicago. Visit www.intlfcstone.com/events for information.

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