Editor’s note: This market commentary is provided by the Dairy Division at FCStone in Chicago, Ill.
The bears slashed and burned through the Class III market to open December, driving months through mid-2015 deep into the red. The 1Q 2015 pack suffered the brunt of the onslaught, shedding 68¢ to settle at $15.92/cwt. Residual weakness took 2H 2015 contracts double-digit lower, as well, all on record volumes of more than 4,000 Class III contracts changing hands.
Yesterday’s performance has me wondering if the market has put in a short-term bottom, or if it will lead to further price erosion? The aggressive nature of the session and the shocking volume totals have the hallmarks of an exhaustive move, especially when considering it comes on the heels of successive weakness over the past week or so. Granted, bearish headwinds continue to permeate through the market and weigh on the psychology of the trade. Technically, the market looks oversold, so be on the lookout for a short-term bounce.
In sympathy with Class III, a strong showing by the bears drove cheese futures sharply lower, despite a 2.75¢ pop to the upside for the block price. Prices tumbled into the red through 2015, bringing the 2015 pack average sub $1.70/lb.
Dry Whey futures also succumbed to selling pressure through 2015.
Stress cracks in Class IV futures became more visible, as the market moved sharply lower, on the heels of weakness stemming from butter and NFDM markets.
Butter futures responded to an eroding spot market by legging lower through the bulk of 2015. Spot prices had held in the vicinity of $2.00/lb., but have slipped to levels not seen since the beginning of November.
Despite a steady spot market that left the price stagnant at $1.1150/lb., NFDM futures tracked lower. The bulk of the downside pressure hit contracts through the first half of 2015.
Dec. 1 spot session results:
Block cheese: $1.7100 (up 2.75¢)
Barrel cheese: $1.6475 (unchanged)
Grade A NFDM: $1.1150 (unchanged)
Butter: $1.9225 (down 4.75¢)
• Class III, Cheese & Dry Whey futures to open mixed to firm
• Class IV & NFDM futures to open lower
• Butter futures to open steady to higher
Grain markets opened December on solid footing. By the closing bell, both corn and soybean futures posted penny gains on moderate volume. Export inspections were basically a non-event, as corn came in within expectations, but soybeans registered on the light side. Both markets were propelled higher by the explosive price action in wheat. News that Russia may curb future exports, as well as domestic and international weather concerns, sparked another round of short covering by funds and propelled the market to five-month highs.
• Corn futures to open lower
• Soybeans, soybean meal to open lower
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