Dairy markets: A weaker week for cheese

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Editor’s note: This market commentary is provided by the Dairy Division at FCStone in Chicago, Ill.

Nearby Class III and cheese futures continued their downward slide.  The current spot cheese price average is $1.94/lb. – nearly a dime lower than the start of this holiday-shortened week.  In just a week’s time, the questions we are asked have shifted from “how high can cheese go?” to “how low?”  Great questions but difficult to answer.  From our vantage point, we see the cheese market having some additional downside, but not a tremendous amount.  Although we expect additional selling in the short-term, we expect some level of balance to come into play around current levels as we roll into June. The market seems to have all the capabilities to chop around $1.90/lb. for a while.  Overall, the tone on dry whey is stable to weaker from current levels. 

Class IV futures pushed between 5¢ and 22¢ lower in the May through December contracts.  Butter futures traded mixed, but mostly lower yesterday, after a quiet spot session failed to inspire the bulls back into the market.  NFDM traded lower throughout the 2014 contracts, despite a penny increase posted in the spot session.

 

May 29 spot session results:

Block cheese: $1.9600 (down 4.0¢)

Barrel cheese: $1.9200 (down 2.5¢)

Grade A NFDM: $1.8325 (up 1.0¢)

Butter: $2.2950 (unchanged)

 

Today's expectations:

• Class III & Cheese to open mixed

• Dry Whey to open steady to higher

• Class IV & Butter to open steady to lower

• NFDM to open steady

 

Grain futures

Grains finished yesterday’s trading session mixed, as the corn and wheat markets continued to slide lower, but soybeans managed a slight gain. The corn market is pressured lower as extremely favorable growing conditions are projected for the next two weeks.  Some expectations for U.S. ending stocks to come in below 100 million bushels continue to provide underlying support to the soybean market, particularly the nearby contracts.

 

Today’s expectation:

• Corn to open lower

• Soybeans to open lower

 

FC Stone's annual Dairy Outlook Conference will be held June 18-19, in Chicago. Visit www.intlfcstone.com/events for information.

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