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¢)
• Class III, Cheese & Dry Whey to open mixed
• Class IV, Butter and NFDM to open mixed
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.