Editor’s note: This market commentary is provided by the Dairy Division at FCStone in Chicago, Ill.
The Class III futures shook off the negative bias that had gripped the market over the previous two trading sessions as contract prices rocketed higher after the release of the Dairy Market News’ bi-weekly international prices report.
The 2013 futures contracts settled between 11 and 43 cents higher on over 1,400 trades as the Oceania international prices are tracking along with the recent results seen in the GDT auctions, an unusual and rare development. The drought in New Zealand has led to the second consecutive decline in milk production, with milk collections falling 16.3 percent in March, year over year, after a 2.3 percent decline in February. Though recent scattered rains in some of the drought-ravaged areas have aided pasture growth, the impact of this condition should continue to provide underlying support to the dairy markets.
Spot session results:
Block cheese: $1.8225 (up 1.75 cent)
Barrel cheese $1.7525 (up 1.25 cent)
Grade A NFDM: $1.77 (up 2 cents)
Butter: $1.735 (up 0.25 cent)
In the grain complex, the May corn contract settled for the day up 2 ¼ cents to $6.51 ¼ near the lows of the day, while the December contract closed up a penny to $5.44 as market participants contend with a tight domestic supply versus burgeoning global production highlighted in Wednesday’s WASDE report. The May soybean futures rallied throughout much of the day before dipping slightly into the close, finishing up 9 ¼ cents to $14.02.
Weather forecasts call for more moisture throughout much of the Corn Belt over the next six to 10 days, helping to ease some drought concerns, though the excess moisture continues to delay plantings and field work and could lead to a switch of some acres from corn to beans.
We expect corn to open 3 to 5 cents higher and beans to open 5 to 10 higher.
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