Spot cheese down 9 cents on CME

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Editor’s note: This market commentary is provided by the Dairy Division at FCStone/Downes-O'Neill in Chicago, Ill.

The dairy market saw signs of life yesterday after a week or so of volume numbers that more closely resembled a holiday period rather than the second week of a new fiscal year.

After nine consecutive sessions of the blocks holding steady, we finally saw movement with blocks down 9 cents on the day. Barrels were also down 9 cents to close below $2.00 for the first time in nearly a month. Although we did see movement, after nine consecutive days of complacency it’s important to note that this move in blocks was on one trade, and a one-day movement is not indicative of a trend. 

That being said, as one could imagine this move did help fuel a downward spiral in Class III futures with futures trading anywhere from +5 to -73. The November contract took the biggest hit and settled at levels not seen in a month. 2013 contracts outside of January, however, did not suffer to nearly the extent that November and December did. Jan was down 29, but other months were -6 to +4.

From a fundamental prospective, there has been little new news. Tightness in California remains, production of cheddar has increased both year over/month over, inventories are still adequate, exports have slowed, but product is still moving and the result….. a mixed picture. 

It was a mixed trade for the grain markets yesterday. Corn was up a penny to 738.25, soybeans up 1.25 to 1493.75, and wheat down ½ a cent at 847.75.

This morning, we look for corn to open 1 to 4 higher and for beans to open steady to 10 higher.

Block cheese: $2.01 (down 9 cents)

Barrel cheese $1.97 (down 9 cents)

Butter: $1.875 (down 5.5 cents) 

Grade A NFDM: $1.60 (unchanged)

These data and comments are provided for information purposes only and are not intended to be used for specific trading strategies. Commodity trading is risky and FCStone Group, Inc., INTL FCStone Inc., and their affiliates assume no liability for the use of any information contained herein. Although all information is believed to be reliable, we cannot guarantee its accuracy and completeness. Past financial results are not necessarily indicative of future performance. Any examples given are strictly hypothetical and no representation is being made that any person will or is likely to achieve profits or losses similar to those examples. References to and discussions of exchange traded products are made solely on behalf of FCStone, LLC. References to and discussions of OTC products are made solely on behalf of INTL Hanley, LLC, and OTC products are only available to eligible counterparties.



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