Spot cheese unchanged Monday on CME

 Resize text         Printer-friendly version of this article Printer-friendly version of this article

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

The Bernanke is falling, the Bernanke is falling. We’re going over the cliff! Wait, which one? The fiscal cliff or the dairy cliff? Oh, whew, we’re safe.

Are we?

We have averted the “cliffs;” the QEs of the Fed are passed and about done in spending prowess. We are to stagnate and see how we recover or if we recover economically. And dairy is left to much the same. No Dairy Security Act, no new farm bill (anytime soon), no new federal order policy ― it is much of the same.

For some time, years now, we’ve heard the talkers of the corn/milk correlation. There are lots of takes and theories on it, and all are interesting to hear out and look into. Clearly, they connect somehow, but exactly how given the insertion of ethanol as a huge user of corn and funds… and well it just “ain’t as simple as two plus two.” Nonetheless, we look into the market to see where those who put their money where their mouth is are going and they are going after a lagged correlation.

Jan milk is in “pricing mode” so we’ll negate the 6-cent gain there yesterday and focus on beyond. Feb-April contracts were 1 to 3 lower on no major news other than a major grain bull move the last two sessions. And during this grain bull move, no one bought up these nearby months on light volume to yield a price increase. However, we can see yesterday that May-Dec13 were 4 to 10 higher, figuring when milk production might feel the “pain” probably a good percentage of it.

Spot session results:

Block cheese: $1.72 (unchanged)

Barrel cheese $1.6725 (unchanged)

Grade A NFDM: $1.535 (unchanged)

Butter: $1.46 (up 1 cent)

In the grain complex, the bull is back in town. Corn ran away with it; beans blew through $14 as expected. Funds have added corn contracts for six consecutive sessions now; we appear poised to challenge $7.50 in a hurry. March corn gained 2.2% or 15 ¼ cents to $7.24. Beans made up for Friday’s bullish lapse as they moved up 44 ¾ in March (3.3%) to $14.18. a pullback to buy looks good, but sometimes you just have to jump in and at least short-term that’s what it looks like here. Long-term, we have shown time and time again that $7.50 corn kills demand so watch out above.

We look for corn to open soft and soybeans 2.5 to 3.5 cents lower. 

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. 

 



Comments (0) Leave a comment 

Name
e-Mail (required)
Location

Comment:

characters left


Grand L60 Series

Kubota’s Grand L60 Series combines a higher level of luxury with outstanding productivity never before seen in this class of ... Read More

View all Products in this segment

View All Buyers Guides

)
Feedback Form
Leads to Insight