Editor’s note: This market commentary is provided by the Dairy Division at FCStone/Downes-O'Neill in Chicago, Ill.
Class III prices rallied despite no price support from the spot cheese markets.
Weather, weather, weather…. it supported the grain markets and also the dairy markets yesterday. Milk per cow is off a bit on the West Coast but largely seasonal; however, the Midwest is off significantly and cheese production is declining.
Buyers expressed late interest in buying the $1.60 cheese level. And, if cheese production does drop off, it isn’t too hard to imagine some of those buyers shifting toward the $1.70 level, even though it will knock off some demand. But some demand should also come off a corn market that jumps up 5% a day in price, shouldn’t it?
The rain dance just ain’t working. Lack of rain over the weekend started the price rally yesterday, and then talk of crop conditions for corn expected to fall 5 to10 percent helped to spur what was at one point another limit-up day in corn.
When it rains or demand numbers show a big drop, this thing could tumble violently. But, until then, it is a buy-the-breaks bull.
Lots of focus on comparisons to the 1988 crop year…. Corn crop condition now down to 40 percent good/excellent this week, falling 8 percentage points from last week. And beans were 40 percent this week, down 5 percentage points from last week.
Daily CME spot market prices:
Block cheese: $1.64 (unchanged)
Barrel cheese $1.66 (down 1.5 cent)
Butter: $1.54 (up 0.75 cent)
Grade A NFDM: $1.23 (up 0.25 cent)
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