Editor’s note: This market commentary is provided by the Dairy Division at FCStone in Chicago, Ill.
The steady move lower continued into the overnight only to be reversed soon after the pit session opened yesterday. From there, it was off to the races with gains we had not seen in the Class III market since the 16th of this month. The June contract gained +.24 on the day, followed by the July contract which garnered a +.21 cent gain on the day. We saw a little better volume than we have seen all week with just over 1,100 contracts traded. The 3rd Quarter pack average gained +.18 cents to finish the day at $18.86.
Another lackluster day in the spot market was a contributor to the move higher as there were no trades in the blocks or barrels for a second day in a row. The only activity was a lower offer in the blocks, but the limited price action a ¼ cent lower on the close was not sufficient to resume bearish price pressure. The cheese futures saw a little upside in spite of the spot market weakness with gains from +.0020 to +.0250 in the 2013 contracts, save for the October contract which posted a loss of -.0070 on the day.
This can be viewed as some sort of stabilization in the market with lack of selling activity in the spot session, but we will need to get a trend going here to confirm the theory. A day with lower closes followed by an up-day does not yet make a trend. We are cautiously forming the opinion that we could be forming a bottom here, but coming into a holiday weekend with lower-than-average volume for the week gives this writer a bit of a pause to make a call for higher prices to come, especially with some of the negative fundamental news out there for the complex about high inventories and the fact that there is more milk available than usual for this time of the year. Note corn is firming after expectations we’d rush lower to a $4 type of price, and that could be lending some support to the Class III market for now.
Spot Session Results
Block cheese: $1.7575 (down 0.25 cent)
Barrel cheese: $1.73 (unchanged)
Grade A NFDM: $1.68 (unchanged)
Butter: $1.555 (down 1.5 cent)
Grains found some fuel to turn things up again yesterday from the export sales results which were in general bullish. Old crop corn came in at 9.5, beating expectations of 3.9 to 7.9 million bushels. New crop corn came in on the upper end of expectations at 7.0 with expectations from 3.9 to 11.8 million bushels. Soybeans exceeded expectations in the old and new crops as wheat exceeded expectations in the old crop coming in at 10.7 vs. 0.0 to 7.3 million bushels. New crop wheat was on the upper end of expectations coming in at 14.0 vs. 11 to 14.7 million bushels