Dairy markets: Sell pressure on blocks

 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 in Chicago, Ill.

Nearby Class III futures respected technical support yesterday and bounced on lighter volume, despite the first bout of sell pressure we’ve seen for the block market all year. Blocks were bid 10¢ lower out of the gate before settling 3.50¢ lower, just a half penny higher than barrels.

Do we see a turning tide for spot cheese? The answer: Not much has changed in the country from this time last week. We hear there are some small amounts of cheese starting to free up, but we hear that orders are good from both the U.S. buyers and from abroad. Generally, we’d expect to see more pushback on orders beginning with the domestic buyers as prices come down.

Dry whey softened a bit yesterday on light volume. We look for a steady-to-lower whey market as cash deals in the country are largely quiet.

Butter futures continued their corrective sell-off yesterday to finish from 1.5¢ to 4.7¢ lower from February to December. Ironically, such declines come on the heels of what was another bullish USDA report for butter. We look for more of a mixed trade today, but see very little likelihood of much more weakness. Buyers once again supported nearby NFDM futures after several days of weakening prices. The futures market will continue to pay heed to the higher AMS price for the time being. Class IV traded 2¢ to 31¢ lower. We expect the downside is limited.

 

Feb. 5 spot session results:

Block cheese: $2.3250 (down 3.5¢)

Barrel cheese: $2.32 (unchanged)

Grade A NFDM:  $2.00 (unchanged)

Butter: $1.88 (down 1.0¢)

 

Today's expectations:

• Class III, Cheese & Dry Whey to open mixed

• Class IV, Butter and NFDM to open mixed

 

Grain futures

Corn futures have slowly and methodically risen, with spreads between contract months narrowing, indicating a lack of fresh farm sell activity. The surprise from next Monday’s USDA report, from our vantage point, is only a less bearish fundamental picture.  If that is the case, however, expect higher prices for corn by this time next week. 

The soybean market continues in a very choppy, sideways trade. Bean meal was the limiting factor yesterday on talk of importing meal into the U.S.  Also, the soybean market is convinced that we are going to plant 3+ million more acres this spring. We won’t get the official USDA estimate until the Planting Intentions Report on March.

 

Today’s expectation:

Grains look to open mixed  

 

The trading of derivatives such as futures, options, and swaps may not be suitable for all investors. Derivatives trading involves substantial risk of loss, and you should fully understand those risks prior to trading. Any reference to past performance is not indicative of future results. All references to futures/options trading are made solely on behalf of FCStone, LLC. All references to swap execution and bi-lateral swaps are made solely on behalf of INTL Hanley, LLC. FCStone, LLC will clear swaps when applicable. Swaps are only available to eligible counterparties. All observations of economic, political and/or market conditions are not intended to refer to any particular trading strategy, promotional element or quality of service provided by INTL FCStone Inc. and its subsidiaries and should be construed as market commentary. All recommendations to buy or sell a specific derivative or forecasting statements regarding market activity and the pricing thereof should be construed as a solicitation in any jurisdiction in where such an offer or solicitation would be legal. Proper context and guidance including but not limited to the particular trading objectives, financial situations and the needs of the intended audience were taken into consideration when this recommendation was prepared. Contact your account representative for specific advice to meet your specific trading preferences or goals. These materials represent the opinions and viewpoints of the author, and do not necessarily reflect the viewpoints and trading strategies employed by INTL FCStone Inc. and its subsidiaries. Sources of information believed to reliable were used in preparing such observations, and no guarantee or representation regarding the accuracy of those sources has been made. INTL FCStone Inc. and its subsidiaries are not responsible for any redistribution of this material by third parties, or any trading decisions taken by persons not intended to view this material.


Prev 1 2 Next All



Comments (0) Leave a comment 

Name
e-Mail (required)
Location

Comment:

characters left


RX7320

When moving hay to feed dairy cows, farmers are seeking a versatile tractor. KITOI’s new Tier 4 RX series tractors ... Read More

View all Products in this segment

View All Buyers Guides

)
Feedback Form
Leads to Insight