Editor’s note: This market commentary is provided by the Dairy Division at FCStone/Downes-O'Neill in Chicago, Ill.
Cheese futures remained steady to slightly firmer Tuesday, while for Class III it was a very light volume session in which price receded ever so slightly on a stalling of spot price increases and Global Dairy Trade (GDT) softness.
Low volume alongside a limited increase in OI of just 52 contracts gives little merit toward any expected downside follow-through in Class III pricing. We see good cause for buying the breaks on a forward basis and nothing has changed that here ― not even unexpected declines in GDT pricing.
Dry whey reversed Monday’s gains and is chopping bullishly at historically high prices which don’t appear poised for any significant price declines in the near future.
We look for Class III and cheese to open higher and dry whey steady.
Technical selling pressure and a quick harvest pace kept the pressure on the bean markets as they plunged lower for the second time this week and as funds plowed out of positions again to the tune of an estimated 9k contracts yesterday. Corn was another story, although it traded lower a number of times throughout the day. A late-session surge pushed Dec corn up a slight but pertinent penny and a half to 7.5825.
One side to the corn coin is that it has failed to rally, and that is bearish, but we see at least short term some more of the other side; prices have held above water while all other grains have been violently assaulted with price pressure.
Block cheese: $2.085 (unchanged)
Barrel cheese $2.035 (unchanged)
Butter: $1.95 (unchanged)
Grade A NFDM: $1.66 (unchanged)
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