Editor’s note: This market commentary is provided by the Dairy Division at FCStone in Chicago, Ill.
Class III futures activity was strong, but prices fell sharply during the holiday-shortened week. December 2014 to March 2015 Class III futures contracts were down 15¢ to 47¢, and 1¢ to 15¢ lower from there through the end of 2015.
The spot block market dipped 4.75¢ on Wednesday to close the week at $1.6825/lb.; barrels settled at $1.6475/lb., a 9.25¢ loss from the prior week. Cheese futures also closed out the week lower. With spot cheese setting fresh lows, downside momentum seems likely to continue to open the post-holiday trade.
Dry whey futures closed the week on a downtick, and have seemingly lost momentum in 2015.
Class IV futures closed out the week mixed, with losses much smaller than Class III.
The 1Q 2015 pack averaged $15.44/cwt. Little seems to be changing in the way of fundamentals and prices seem likely to remain under pressure.
Butter futures finished the week lower. Spot butter prices were down 2¢, and that’s likely just the beginning of the losses yet to come.
NFDM futures closed out the week mixed, but mostly lower. December NFDM futures settled at $1.3750/lb., while the 1Q 2015 pack average lost 1.517¢, to $1.21533/lb.
Nov. 26 spot session results:
Block cheese: $1.6825 (down 4.75¢)
Barrel cheese: $1.6475 (down 5.75¢)
Grade A NFDM: $1.1150 (unchanged)
Butter: $1.9700 (down 2.0¢)
• Class III, Cheese & dry Whey futures to open lower
• Butter & NFDM futures to open lower
• Class IV futures to open steady to lower
Grains had a mixed close on Friday, as wheat found support from a reported Russian cold spell and lack of exports. Soybeans reversed and closed down, pulling corn along with it. The crude oil price collapsed after OPEC announced unchanged production. For now see support at $10.00 in soybeans and $3.7150 in corn.
• Corn futures to open lower.
• Soybeans, soybean meal to open higher.
The trading of derivatives such as futures, options, and swaps may not be suitable for all investors. Derivatives trading involves substantial risk of loss, and you should fully understand those risks prior to trading. Any reference to past performance is not indicative of future results. All references to futures/options trading are made solely on behalf of FCStone, LLC. All references to swap execution and bi-lateral swaps are made solely on behalf of INTL Hanley, LLC. FCStone, LLC will clear swaps when applicable. Swaps are only available to eligible counterparties. All observations of economic, political and/or market conditions are not intended to refer to any particular trading strategy, promotional element or quality of service provided by INTL FCStone Inc. and its subsidiaries and should be construed as market commentary. All recommendations to buy or sell a specific derivative or forecasting statements regarding market activity and the pricing thereof should be construed as a solicitation in any jurisdiction in where such an offer or solicitation would be legal. Proper context and guidance including but not limited to the particular trading objectives, financial situations and the needs of the intended audience were taken into consideration when this recommendation was prepared. Contact your account representative for specific advice to meet your specific trading preferences or goals. These materials represent the opinions and viewpoints of the author, and do not necessarily reflect the viewpoints and trading strategies employed by INTL FCStone Inc. and its subsidiaries. Sources of information believed to reliable were used in preparing such observations, and no guarantee or representation regarding the accuracy of those sources has been made. INTL FCStone Inc. and its subsidiaries are not responsible for any redistribution of this material by third parties, or any trading decisions taken by persons not intended to view this material.