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

 

Class III milk futures saw red across the board, with futures settling anywhere from +1¢ to -20¢ on the day. Regardless of today’s move, futures’ trading has been range-bound, with the first-half pack trading within a 25¢ range since Nov. 1.  

Mixed fundamental news should keep the market in a state of flux in the near term. This “tug-o-war” should continue through the beginning of December. While U.S. prices have become more competitive internationally, there’s plenty of milk available around the globe, so do not expect U.S. exports to ramp up anytime soon. We’ll look for any changes in market sentiment, but as of today the bearish bias is still building.

Class IV futures took a dive on the back of a lower spot trade from Butter and NFDM. The 1Q 2015 pack average lost 15¢ to settle at $15.47/cwt., while the 1H 2015 average lost 7¢ to settle at $15.40/cwt. 

Spot butter lost 3¢ to settle at $1.99/lb. Futures markets saw some selling pressure. As we move into December, one would imagine we could see more of a drop in pricing as domestic prices look to close the spread with global prices.

NFDM continues to sink on the spot market, and futures contracts put in new lows. We do not see an end in sight.

The CME is closed Thursday-Friday, Nov. 27-28, for the Thanksgiving holiday.

 

Nov. 25 spot session results:

Block cheese: $1.7300 (unchanged)

Barrel cheese: $1.7050 (down 1.5¢)

Grade A NFDM: $1.1175 (down 2.25¢)

Butter: $1.9900 (down 3.0¢)

 

Today's expectations:

• Class III & Cheese futures to open steady to lower

• Dry Whey futures to open steady

• Butter, NFDM & Class IV futures to open steady to lower

 

Grain futures

The grain complex got a pre-holiday boost in what continues to be a very choppy trade. CBO data is projecting a 900,000 acre reduction in U.S. corn plantings for 2015, with yields pegged at a healthy 167.3 bushels/acre, keeping U.S. stocks near 2 billion bushels next year. Soybeans were led higher by December soymeal. Strong U.S. exports and light soymeal pipeline supplies continues to be supportive.

 

Today’s expectation:

• Grain futures to open mixed

 

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.