Editor’s note: This market commentary is provided by the Dairy Division at FCStone in Chicago, Ill.
Eighty Class III contracts traded overnight, all higher, continuing this week’s trend of good volume on higher prices.
Will spot cheese moves allow the run to sustain through the day?
Prices in milk and cheese futures for Sept and Oct once again moved up with authority, but the other months languished. Volume has been strong all week and looks to stay that way now.
For the week ending July 27, dairy cow slaughter under federal inspection was up .3%, at 57,200 head, compared with the same period the previous year. Year-to-date slaughter levels are 2.9% higher than 2012 levels, with 1,792,400 head slaughtered.
Since last Thursday, the block price is down 1.75 cents at $1.7925. There have been eight trades. The barrel price was 3.25 cents higher at $1.7925 with 4 trades. The spread is even ― outside the historical range of 3 to 5 cents.
Spot session results:
Block cheese: $1.7925 (unchanged)
Barrel cheese: $1.7925 (unchanged)
Grade A NFDM: $1.7925 (up 1 cent)
Butter: $1.40 (down 2 cents)
New crop Nov beans are back to challenging the $12 mark, corn was slightly higher yesterday and wheat followed. The recent “fund roll” has been described as “weak” and, thus, new/old crop spreads haven’t gotten the big push expected toward a cost of carry. Chinese bean and meal buying continues to underpin the bean market, but with the USDA report out on the 12th there probably isn’t more to any of this than some short covering/position squaring. Corn weather continues to look good in most areas of the Corn Belt, save for Iowa which appears to miss much rain but no major weather concerns to push the market upward. The only bull weather talk is of frost potential… we struggle with this kind of talk this early, but it is out there.
Overnight, beans led the charge higher as wheat moved up slightly and corn traded both sides of slightly unchanged.
This morning, we look for corn to open soft and beans up 8 to 12 cents
The trading of derivatives such as futures, options, and swaps may not be suitable for all investors. Derivatives trading involves substantial risk of loss, and you should fully understand those risks prior to trading. Any reference to past performance is not indicative of future results. All references to futures/options trading are made solely on behalf of FCStone, LLC. All references to swap execution and bi-lateral swaps are made solely on behalf of INTL Hanley, LLC. FCStone, LLC will clear swaps when applicable. Swaps are only available to eligible counterparties. All observations of economic, political and/or market conditions are not intended to refer to any particular trading strategy, promotional element or quality of service provided by INTL FCStone Inc. and its subsidiaries and should be construed as market commentary. All recommendations to buy or sell a specific derivative or forecasting statements regarding market activity and the pricing thereof should be construed as a solicitation in any jurisdiction in where such an offer or solicitation would be legal. Proper context and guidance including but not limited to the particular trading objectives, financial situations and the needs of the intended audience were taken into consideration when this recommendation was prepared. Contact your account representative for specific advice to meet your specific trading preferences or goals. These materials represent the opinions and viewpoints of the author, and do not necessarily reflect the viewpoints and trading strategies employed by INTL FCStone Inc. and its subsidiaries. Sources of information believed to reliable were used in preparing such observations, and no guarantee or representation regarding the accuracy of those sources has been made. INTL FCStone Inc. and its subsidiaries are not responsible for any redistribution of this material by third parties, or any trading decisions taken by persons not intended to view this material.