Daily Reports
Cheese prices tumble on the CME
Yesterday, the CME spot cheese market experienced another day of selling pressure - and in a big way yet again. The 10.5-cent drop in the blocks and 11-cent tumble in the barrels took the weekly drop to 30 cents for the block and 22.5 cents in the barrel.
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Grain markets tumble
The grain markets continued to get pounded yesterday, with corn and beans closing limit down. The concerns over Japan have hit not just the grain markets but all markets with the force of a magnitude 9 earthquake. As we have noted, Japan is the largest importer of U.S. grains, and with the devastation to the Northeast Coast at least five major ports that were hit by the tsunami are closed down increasing concerns over the pace of Japanese imports.
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Market commentary: All eyes on Japan
The grain markets started the week on a mixed note as traders rectify the impact of the devastation in Japan and recoil some from last week’s selling pressure. Near-term Japanese demand for inventories of grain (and copper, iron ore, rubber, etc.) will play second fiddle to the health and safety of the Japanese people.
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Will the Ides of March bring a drop in cheese?
The tragic events in Japan have dominated the news wires and the financial markets overnight. Commodities were lower Sunday night as the shoot-first response of traders is to expect a significant - albeit short-term - drop in Japanese demand for oil and other key commodities. And beyond that potential, markets are jittery surrounding the uncertainty of weather events and political friction around the world. Welcome to Mid-March.
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Speculators run away from commodities
Speculative traders continue to shed long positions in commodities overnight on the news of a massive, record-breaking earth quake off the shores of Japan and the ensuing potential for tsunami damage is plastered on the news wires this morning. In the Middle East, tensions are heating up with protests in Saudi Arabia. Between natural and man-made disasters, speculators who normally welcome uncertainty are taking a different tact. Investors want to take their money and go home when it comes to many commodities and that is providing fresh selling almost regardless of other fundamental news.
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Class III rebounds thanks to cheese and butter
It was a big price swing for the nearby Class III futures contracts yesterday. April Class III traded as low as $17.60 overnight and into the early morning, but retraced and rallied sharply after a steady Chicago Mercantile Exchange spot cheese trade. The trade decided that the discounts futures have been running were just too much to handle for the current pricing of spot. When the closing bell rang, Class III finished mostly firm in the nearby and more mixed in the deferred contracts.
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Cheese puts pressure on Class III
Heavy selling put pressure on the Class III complex after the Chicago Mercantile Exchange spot block price declined by 0.75 cents to $2.0125, the first lower close for the block price since Jan. 19. The already discounted Class III futures prices has been a reluctant follower of CME spot cheese over the past few weeks. Perhaps; but my thought is that the default position should largely be that the futures market leads cash. If you want a glance at what the CME spot market is capable of, look first at the futures markets.
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Class III moves lower, but butter rally remains strong
The $2 cheese bell has been rung with a lone trade occurring at that price. Fanfare, however, did not spread into the Class III futures. A paltry 589 contracts traded hands and what little firming to futures prices there was early in the session evaporated by the end of the day as Class III prices closed slightly lower across the board.
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Dairy trade eerily quiet, Fonterra auction strong
The Class III market in particular – and the dairy complex in general – were eerily quiet yesterday as trading volume continues its slide this week. Cheese buyers are kicking the dirt off their shoes at the doorstep of $2.00 cheese. The question on everyone’s mind is whether or not these are welcomed guests. If history serves as a guide there ought to be an increased level of cheese selling resistance at a $2.00 plus cheese market. Look for a mixed open on Class III.
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Block cheese nears $2
Class III finished sharply higher on Friday after sustaining sharp losses for the bulk of the shortened holiday week. Perhaps the correction is over. But the price increases Friday appear to be built on weaker buying as short-covering (likely some profit-taking) was a main reason for the end-of week rally.
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Dairy complex correction under way
Class III futures lost sizable ground yesterday on aggressive selling and a spike in trading volume. In all, 3,279 contracts traded hands as Class III lost its higher early footing after the CME spot block market fell ½ cent to $1.9400 - the first lower close for barrel cheese since Jan. 19.
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