Slow, short-term bottom being formed for Class III

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Editor’s note: This market commentary is provided by the Dairy Division at FCStone/Downes-O'Neill in Chicago, Ill.

The Class III markets found a bit of support Friday as prices were mixed to mostly higher on just over 1,700 trades. 

The market started the trading session slightly lower, but was able to rebound as the day progressed along with most of the dairy complex. A significant portion of the trading volume, 1,187 contracts, occurred within the first half of 2012, with prices ranging from down two to up 14 cents. The February to April pack increased six cents to close out at $15.49 for Friday’s session, but still lost nine cents overall on the week. 

The trend remains the same, as abundant milk production with a lack of offsetting demand increases continues to hang over the market. The blocks and barrels helped to support the day’s trade as both prices remained unchanged on the day. Three trades took place in the blocks, while no trades occurred in the barrels. Very short term, we lean toward some more weakness perhaps. But it does feel as though we are rounding out a bottom which, come April or May, could explode to the upside if we get any weather challenges at all. 

Friday, U.S. corn futures were mixed with the front months gaining anywhere between 1 and 2 cents while the back months were up anywhere between .75 and three cents. Markets traded around even throughout the day, with talks of grain buying interest from China and other Asian countries. USDA’s projections for increased acreage and an increased yield in this year’s crop are bearish for new crop prices. Many also think that March options expirations played a role in the sideways trade.  Corn futures in March ended up 1 ¼ cents to $6.40 ¾ and December futures fell to $5.58, down ¾ cents. 

We look for corn to open 3 to 5 cents lower and for beans to open 1 to 3 lower.

Daily CME spot market prices:

Block cheese $1.4675 (unchanged)

Barrel cheese $1.47 (unchanged)

Butter:  $1.4175 (up 0.25 cent)  

Grade A NFDM: $1.2925 (unchanged)

These data and comments are provided for information purposes only and are not intended to be used for specific trading strategies. Commodity trading is risky and FCStone Group, Inc., International Assets Holding Corporation, and their affiliates assume no liability for the use of any information contained herein. Although all information is believed to be reliable, we cannot guarantee its accuracy and completeness. Past financial results are not necessarily indicative of future performance. Any examples given are strictly hypothetical and no representation is being made that any person will or is likely to achieve profits or losses similar to those examples. References to and discussions of exchange traded products are made solely on behalf of FCStone, LLC. References to and discussions of OTC products are made solely on behalf of INTL Hanley, LLC, and OTC products are only available to eligible counterparties.

 

 



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