Editor’s note: This market commentary is provided by the Dairy Division at FCStone in Chicago, Ill.
It was a relatively quiet day for the Class III market.
The spot market failed to elicit any activity or a price change, and thus left futures to correct from the losses of the past few sessions. Oct. finished up 22 cents; Nov up 20 cents, and other months from Dec. through Nov. 2014 were 1 to 10 higher. Volume failed to eclipse even the 500 contract mark. There seems to be little onus on the marketplace currently to make a sizeable move in either direction. Thus, with spot closing unchanged, the futures were left to correct to close the spread between current spot valuations and a discounted futures market. Look for spot to continue to set the tone today ahead of this afternoon’s milk production report.
Spot session results:
Block cheese: $1.7975 (unchanged)
Barrel cheese: $1.7675 (unchanged)
Grade A NFDM: $1.83 (unchanged)
Butter: $1.53 (up 1 cent)
In the grain complex, yesterday was quiet, as well. The corn market finished with a whopping 5-cent range, while soybeans saw a 16-cent trading range. News of the fifth largest sale of soybeans ever ―1.930 mmt to China and 182k mmt to unknown ― came out early this morning, but that really failed to incite much of a reaction. What little excitement came during the final few minutes of trading after the Fed announcement. Both corn and beans moved very near their highs toward to close with corn finishing up 2.25 cents at $4.5626, while beans were up 5.25 cents to $13.4250.
Given the lack of a positive reaction to supportive news the past two sessions, it is getting harder and harder to see funds being able to hold firm on their very long soybean position, especially given the seasonal trend of declining prices this time of year. Yield as we enter the fields for harvest are still likely to determine the next move, but we think it prudent to explore purchasing put options against forward contracts. The Fed announcement and softer U.S. dollar may actually offer a rally in futures prices to lessen the purchase cost of the aforementioned options. Please call to discuss your specific situation.
This morning, we look for corn to open up 3 to 5 cents and soybeans up 7 to 10.
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