Spot cheese closes unchanged on CME

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

Friday’s Cass III trading session ended with mixed results with the Dec12 contract gaining just a penny, while the 2013 contracts finished with prices between 8 higher and 7 lower. The spot cheese session provided little insight, as both the blocks and barrels finished unchanged and untraded, though each market closed the session with one uncovered bid. The first quarter of 2013 futures pack average price closed out the week at $18.15, down 18 cents for the day and a total of 63 cents lower for the week.

Milk production in the Midwest is increasing steadily along seasonal trends. Milk production in the West is building slowly and is running behind year-ago levels as many producers struggle with profitability as high feed costs continue to weigh heavily. There is talk ― and that’s all it is right now is talk ― that the banks will be taking forceful action early in 2013 out West.

The grain markets closed out the week with weaker price action as lower prices were registered across the entire grain complex.  The Mar13 corn contract fell by 14 ¼ cents on Friday, leading to a weekly loss totaling 15 ½ cents. The Jan13 soybean contract dropped 19 cents to $14.72 ¼ with a weekly loss of 33 ½ cents. 

The weakness in the grain markets can be attributed to a couple issues. The low water levels of the Mississippi are adding to the concerns regarding U.S. grain exports, which have been slowing of late, while U.S. crops are finding demand for South American-originating crops to be strong.  Ethanol-related demand for corn has been slipping of late, while the impending “fiscal cliff’ we are facing in the New Year is dampening market optimism. For now, though, the focus is likely on tomorrow’s USDA Crop Production and Supply/Demand report as people get some positions squared away.

Block cheese: $1.76 (unchanged)

Barrel cheese $1.66 (unchanged)

Grade A NFDM: $1.5575 (unchanged)

Butter: $1.59 (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., INTL FCStone Inc., 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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