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

 

Class III and Cheese futures markets bounced yesterday after three consecutive days lower. 

Since the start of February, spot Blocks have traded in a range of $1.53-$1.5475/lb., but the April Class III contract has whipsawed from a low of $14.83/cwt. all the way up to $16.12/cwt.

Settlements for Class III were anywhere from 4¢ to 29¢ higher yesterday, as 2H 2015 futures surged back near last week’s highs.

Six trades seen in the spot Block market yesterday were the highest weekly total going back to the week of Jan. 16. Perhaps the winds are changing and more cheese will be brought to the exchange.

Dry Whey looks to be moving in a sideways range, with prices back into the low 40s¢/lb.

It was a mixed day for the Class IV products, despite weakness being seen in both the NFDM and Butter spot markets. The theme in the marketplace currently seems to be end users who are very comfortable with their current protection and physical position, but fearful and uncomfortable with their position in the second half of the year.

Butter futures were mostly lower early on as the spot market closed down 2.75¢, to $1.6425/lb., but the strength seen in other markets spilled over and prices rallied from the lows by the close. Given the sharp premium the futures are carrying relative to spot, it is difficult to see much upside for futures.

 

Feb. 24 spot session results:

Block cheese: $1.5450 (unchanged)

Barrel cheese: $1.4825 (down 0.25¢)

Grade A NFDM: $1.0825 (down 1.25¢)

Butter: $1.6425 (down 2.75¢)

 

Today's expectations:

• Class III, Cheese & Dry Whey futures to open mixed

• Butter, Class IV & NDFM futures to open mostly lower

 

Grain futures

Reports of a truck driver strike in Brazil shone a light on the logistic issues faced in South America, and put some fear premium back into the U.S. grain market yesterday. That pushed soybeans up 16.75¢ to $10.16/bushel. While corn traded near double-digit higher following beans, it sold off sharply and closed -1.25¢, at $3.7750/bushel. The soybean chart still looks bullish based on the Brazil news, but corn broke through the recent range to the downside.

 

Today’s expectation:

• Corn & Soybean futures to open slightly lower

 

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