Class III futures up Thursday in nearby months

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

Class III futures settled higher yesterday in the nearby months, anywhere from +4 to +12 following some strength in spot. 

Blocks and barrels were both slightly higher yesterday with blocks up 1 cent and barrels up 1 ¼ cents. Since last Thursday, the block price is up 1.75 cents at $1.7825. There have been 8 trades. The barrel price was 3.25 higher at $1.7525 with 15 trades. The spread is 3 cents, inside the historical range of 3 to 5 cents.  However, the 2014 contracts reaction was mute as 2014 Class III settled mixed anywhere from -1 to +5. Currently, the 2014 Class III pack is trading at $16.87, a level not seen since the beginning of August. 

The current government gridlock and default concern, as well as lack of readily available USDA pricing information, has only perpetuated the choppiness seen as of late. 

Internationally, conditions in New Zealand seem to be ideal for production with precipitation and temperatures at or near-normal levels. Recent reports from Fonterra have stated 5 percent growth YOY, while smaller co-ops report 8-10 percent growth. Soil moisture levels also seem to be normal in the north of the North Island and near normal in all other regions.

Spot session results:

Block cheese: $1.7825 (up 1 cent)

Barrel cheese: $1.7525 (up 1.25 cent)

Grade A NFDM:  $1.84 (unchanged)

Butter: $1.53 (unchanged)

December corn settled slightly lower, down 5 ¼ cents, while beans settled slightly higher, up just ¼ cent on the day. 

Traders seem to be leery of speculation that the EPA will consider lowering the mandate for 2014. Since the mandate’s inception, production of ethanol has matched or exceeded the mandate.

Weather continues to weigh heavy on the market..

This morning, the grains looks to open mostly lower, with corn and wheat steady to 4 cents lower and beans down 4 to 7 cents.

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