Editor’s note: This market commentary is provided by the Dairy Division at FCStone/Downes-O'Neill in Chicago, Ill.
Class III and cheese futures were under some sell-side pressure early on yesterday. In front of the afternoon’s Cold Storage report, buyers were somewhat scarce amid talk of inventory mounting concerns. The spot market activity alleviated much of that concern, as blocks saw their first up day since Oct. 3. And barrels, which jumped up strongly ― 5.25 cents ― saw their first uptick since Oct. 4. The cheese price feels heavy, though, and stagnating fast. While volume in Class III was slightly below normal, despite the big price swings, the cheese futures saw a very strong trade near 200 contracts as prices wound up slightly lower on the session.
The grain markets tried to roar in bullish fashion very early in the morning, but that rally fizzled out quickly. Beans led the charge ― no shocker there. But corn struggled all day with a tight trading range ― less than 5 cents ― and pulled down by a plunging crude oil market. As corn finished just a quarter cent lower, nothing changes from last week’s snapshot perspective but certainly there is more resistance to the upside than some might have thought. Technically, it was an “inside day,” meaning that the price activity remained inside the range of the previous session. And inside days are most often followed by resumptions of the previous trend which, in this case, is upward.
Look for corn to open 3 to 6 cents lower and for beans to open 8 to 12 lower.
Block cheese: $2.01 (up 1 cent)
Barrel cheese $1.97 (up 5.25 cents)
Butter: $1.9025 (up 2.25 cents)
Grade A NFDM: $1.56 (unchanged)
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