Class III futures closed mixed last week on CME

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

The Class III futures closed out last week with contracts settling between 13 cents lower and 2 higher on just 669 trades.

The abbreviated USDA Milk Production report released last week for the month of May was viewed as slightly bearish when compared to our estimates, and highlights the current market view in that supply is overwhelming current demand. Total U.S. production came in at 17.742 million pounds, up 0.8 percent year over year versus our anticipated 0.6 percent gain and 2.9 percent higher month over month. Milk production for the 23 states totaled 16.525 million pounds, up 0.86 percent year over year versus our expected 0.6 percent gain. Milk production in the Western and Southwestern states showed signs of weakness as California fell 0.5 percent, New Mexico down 1.1 percent and Arizona down 1.9 percent. These losses were more than covered by gains throughout the Midwest as weather conditions have been cooperative. That being said, forage and feed issues in the area will should weigh on production in the coming months. Year-to-date milk production as of this report was running 0.2 percent ahead of last year.

Spot Session Results

Block cheese: $1.725 (unchanged)

Barrel cheese: $1.7175 (down 0.5 cent)

Grade A NFDM:  $1.73 (up 0.5 cent)

Butter: $1.50 (down 0.75 cent)

The grain markets finished last week with prices falling lower in anticipation of the upcoming USDA crop report and improvements in crop ratings due to improved weather conditions. The July corn contract settled down 11.50 cents at the price of 661.75, while the December contract fell 4.25 cents to close at the price of 556.25. The July soybean contract closed out at the price of 1493.25, down 4.25 cents, while the November beans dropped 11.50 cents to 1273.50.

Expectations for the crop ratings numbers, to be released later today, are for 2 percent increases in both the corn and soybean crops as the recent warm, dry weather conditions have benefited crops. 

This morning, we look for the grain complex to open lower.

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