Editor’s note: This market commentary is provided by the Dairy Division at FCStone in Chicago, Ill.
Last Friday's Class III futures were mixed, but mostly lower. The second quarter futures pack average settled down 16¢ at $19.01/cwt., with a week over week decline of 36¢. Nearby futures are now in line with spot, so they will be very sensitive to spot cheese price movement this week. A continually developing, fundamentally bullish, drought situation in California, and to a lesser degree surrounding Western states, deserves consideration for both producers and end-users alike. Cash cheese futures ended Friday’s trading session with mixed pricing. The sharp decline in the spot cheese markets brought the February through May contracts down by 2.3¢ to 2.9¢. The second quarter of 2014 futures pack finished the week at the price of $1.8710/lb., down 2.27¢ week over week. Whey futures finished out the week with nearly every 2014 contract settling at their respective low price of the trading session.
Class IV futures settled for the week between 7¢ higher and 17¢ lower as the weakness displayed by the butter market overpowered the slight strength of the NFDM. Butter futures closed Friday between unchanged and 4.45¢ lower. NFDM futures settled Friday with the February through May contracts increasing by 0.25¢ and 1.275¢.
Feb. 7 spot session results:
Block cheese: $2.2325 (up 9.75¢)
Barrel cheese: $2.050 (down 9.5¢)
Grade A NFDM: $2.0175 (unchanged)
Butter: $1.82 (down 3.0¢)
• Class III & Cheese to open soft
• Dry Whey to open soft
• Class IV & NFDM to open soft
• Butter to open slightly lower
Grain markets traded in anticipation of Monday’s USDA report, with soybeans and corn moving higher. Forecasts are looking for USDA to project increased corn exports and lower ending stocks, while the soybean outlook still calls for tight ending stocks.
Grains look to open lower
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.