Butter futures may have taken notice of the increases in the auction prices and settled 3/4 to 1 1/2 cents higher yesterday on moderate volume. CME spot butter seems to have found support in the mid-$150s and inched higher on a lone bid. With the strength of world butter prices, we believe it is wise to own a decent portion of your needs through the end of the year.
USDA will be releasing the April Dairy Products Production report later this afternoon. We are looking for monthly butter production to come in 4 percent lower and NFDM production to be slightly lower than last year. Cheese production is still expected to be strong with American cheese coming in up 1 percent and total cheese up around 3 percent. We'll have these figures for you as soon as they are released.
Corn fell five cents per bushel under near ideal six- to 10-day weather forecasts and some technical pressure. Most weather forecasts calls for warmer than normal with a couple of rain systems crossing the Corn Belt in the next six to 10 days. USDA's weekly Crop Progress report released yesterday provided bearish news with 85 percent of the crop emerged and a 76 percent good/excellent rating, 6 percent above last year and 7 percent above the five year average. Some are concerned about La Nina conditions bringing a hot dry summer, but this week’s expected rain pushes those concerns to the back burner. Meanwhile the price of July corn is butting up against its 8-month low and it looks poised to break through to the downside. We suspect it will sometime this week. If it does, we expect fresh selling to add continued pressure to corn prices. Should this occur, we will again recommend that end-users of corn cover upside price risk by purchasing September call options and potentially new crop December call options.http://www.cmegroup.com/daily_bulletin/Section04_Agricultural_Soft_AltInvestment_Futures_2010104.pdf
6/1 Class III Futures: Volume: 1,456 Open Interest (OI) Change: +334 Total OI: 31,681
6/1 Class III Options: Est. Put Volume: 298 Total OI: 23,596 Est. Call Volume: 217 Total OI: 23,587
6/1 Spot Markets: Block Cheese $1.4375 (DOWN 2 3/4), Barrel Cheese $1.40 (DOWN 3), Butter $1.56 (UP 1/4), NFDM: A $1.30 (UNCH), X $1.29 (UNCH)
6/1 Other Dairy Futures Volume: Butter: 70 Dry Whey: 16 NFDM: 3 Class IV: 0