Bull market still intact

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

Class III had a mixed morning yesterday, but following the spot session there was little doubt the bull market is still intact.

The block barrel spread continued to widen with blocks gaining 1.5 cents to $1.8850, while the barrels closed up 0.25 cents to $1.76. Despite more loads making their way to the spot session, buy side interest has not slowed to this point and neither have the price gains. In a heavy volume trade ― nearly 1,800 contracts ― prices settled the day 2 to 28 cents higher from April through December. The largest gains continue to be seen in the nearby months of May, June and July which were all up at least 15 cents on the day.

Spot session results:

Block cheese: $1.885 (up 1.5 cent)

Barrel cheese $1.76 (up 0.25 cent)

Grade A NFDM: $1.785 (unchanged)

Butter: $1.78 (up 1 cent)

It was a relatively quiet session for the grain markets yesterday as futures finished the day mixed, but mostly higher. The slight gains, however, look relatively bullish when you consider the strength in the U.S. dollar and the subsequent weakness seen across most commodities, and crude oil in particular.

May corn finished the day down 2.75 cents to 660.50, while December corn closed up by 6.5 cents to 547.25 as thunderstorms rolled through the Midwest and longer-term forecasts remain wet, heightening the potential for planting delays. Given the forecasts, it’s tough not to be moderately bullish in the short term, but rest assured farmers will plant if they get a window. Interestingly, soybean prices showed the opposite reaction of corn with May closing up 10.75 cents at 1422.25, while November closed down half a cent to 1218. The reversal of the spread is likely due to the planting concerns as soybeans require a shorter growing season than corn. This would manifest itself through a decrease in corn acres should we see a late spring and an increase in soybean acreage. 

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