Editor’s note: This market commentary is provided by the Dairy Division at FCStone/Downes-O'Neill in Chicago, Ill.
A reversal: Sunday night opened lower on Milk Production report stats — too much milk vs. most industry expectations (not ours). However, futures prices rebounded well off their lows until spot trading came around. A three-cent drop in both blocks and barrels sank the Class III rally ― for a day.
While prices dropped, they did so on slightly less volume than they rose on. And while OI increased nicely (258) for the complex, the biggest declining month (Sep) with the heaviest volume (407) saw OI decrease (56); the technical charts show prices well above support levels still and while there was some selling overnight, it was moderate in nature.
Look for futures prices to get back in their bull saddle, but premium to hold in the deferreds with a cost of carry mentality on the thoughts that we will have cow losses — almost all the talk these days is centered around dairy farm bankruptcies, liquidations etc.
The grains were up all day. It was day one of the Pro Farmer tour and the chatter wasn’t good on crop conditions. Poor yield reports from South Dakota, Ohio and Indiana continued coming in, driving prices upward. Corn condition reports were unchanged at 23 percent good/excellent and bean conditions were up 1 percent to 31 percent, but still well below 59 percent last year and 61.6 percent on the five-year average.
We look for corn to open 5 to 7 cents higher and for beans to open 18 to 23 higher.
Daily CME spot market prices:
Block cheese: $1.84 (down 3 cents)
Barrel cheese $1.805 (down 3 cents)
Butter: $1.80 (up 0.75 cent)
Grade A NFDM: $1.65 (unchanged)
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