Dairy markets: Grain market ‘volatile’

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

The Class III 2Q 2014 pack average settled down 4¢, to $20.43/cwt., with the 2H 2014 contracts down 6¢, to $19.14/cwt. It would appear that the upcoming “flush” is on most traders’ minds, but they aren’t willing to give up the ghost on the possibility of more market upside just yet. Blocks were up 0.5¢; barrels were unchanged. Resistance seems to be significant at these levels. The seasonality of the market (i.e. spring flush is not far away and manufactures should be close to meeting Easter demand) gives a case for price decreases over the next month or so, but short-term cheese at the margins is still tight.

The Class IV market saw 2H 2014 contracts gain 6¢, to settle at $20.26/cwt. This market seems content to languish around the last high prices and continues to find support from NFDM and the butter markets. Butter markets had a quiet session in both the futures and in spot.

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

 

March 12 spot session results:

Block cheese: $2.2350 (up 0.5¢)

Barrel cheese: $2.2850 (unchanged)

Grade A NFDM:  $2.04 (unchanged)

Butter: $1.8850 (unchanged)

 

Today's expectations:

• Class III to open steady to firm

• Cheese to open steady to firm

• Dry Whey to open mixed

• Class IV to open steady

• Butter to open mixed

• NFDM to open mied

 

Grain futures

A volatile session was an understatement for the grains yesterday. For corn, ethanol stocks are declining as the industry continues to encounter severe railcar problems and moving product has been difficult. Trade is still watching developments over in the Ukraine, but one would think that as of now, the situation will have little impact on the market.

 Soybeans were the mover yesterday. The talk was of China not only canceling more purchases of U.S beans, but also South American purchases as well.  China buys 69% of U.S. soybean exports. Are we seeing the start of a bubble in China, or are they just playing the game and deferring their purchases to a later time frame to keep stock levels up?

 

Today’s expectation:

• Grain complex to open mixed

 

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