Editor’s note: This market commentary is provided by the Dairy Division at FCStone in Chicago, Ill.
Class III futures put up another day of gains across the board, following a spot session that saw blocks gain 2.5¢ to close within a penny of the all-time high, at $2.35/lb. Futures seem to be reluctant to keep upside momentum at these levels, but are left with little choice with continued gains in the cash market. April led the way, picking up 35¢ to close at fresh contract highs of $21.81/cwt.
So, where’s the top? It’s a question that has resonated now for weeks – with no clear cut answer. It’s a fool’s guess to try and pick tops in the market, or bottoms for that matter. Fundamentally, this market continues to have firm undertones to it that can be attributed to strong international interest for cheese. Granted, a pushback should be expected somewhere on the short-term horizon at these price levels, with spring flush in full swing out West and coming in the Midwest. That's coupled with the latest international price data that reflects a growing disconnect between Oceania and the U.S. market. However, with domestic buyers purchasing on a hand-to-mouth basis, it’s not implausible that a certain level of demand will exist on price breaks.
Class IV futures saw mixed results. Gains were realized from March through May, with lighter gains realized in the fourth quarter. NFDM appears to be stable, yet sluggish. The spot market has provided little in the way of sentiment or direction, yet there have been whispers of an easing of demand at current levels and adequate supplies domestically. European dryers have also been ratcheted up to full capacity, which will further pressure prices from an international scope. Price weakness has also been experienced in Oceania and Western Europe.
FC Stone's annual Dairy Outlook Conference will be held June 18-19, in Chicago. Visit www.intlfcstone.com/events for information.
March 13 spot session results:
Block cheese: $2.35 (up 2.5¢)
Barrel cheese: $2.2750 (down 1.0¢)
Grade A NFDM: $2.04 (unchanged)
Butter: $1.8850 (unchanged)
• Class III to open mixed
• Cheese to open mixed
• Dry Whey to open mixed
• Class IV to open mixed
• Butter to open mixed
• NFDM to open mixed
The grain market traded in mixed fashion yesterday, with corn unable to pull away from its 200-day moving average. Nevertheless, there’s a firm tone here in that exports have been impressive, funds have been buying, and the weather has not been cooperating. Soybeans, on the other hand, put on quite a performance. The market is closely monitoring progress with the South American harvest, as well as Chinese behavior that has resulted in cancellations of Brazilian and U.S. cargoes. Keeping a finger on the pulse of this development would be prudent as a changing of the guard may be taking place here.