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

Bullish momentum in the Class III market hit a road block and stalled yesterday. Sellers stepped in and pressured nearby contracts down double digits, with residual weakness dragging deferred months incrementally lower. By the time the dust settled, the March contract had shed 29¢, with April close on its heels, giving back 21¢.

Cheese futures followed Class III action closely, pulling back from recent gains after the spot price remained unchanged. A push to the upside will likely be required for the futures to continue on a bullish trajectory.

Overnight Class III and Cheese prices continued to leak lower.

The dry whey market has been probing to the upside of late. However, nearby contracts came under pressure yesterday, as bear spreaders sold the front months and bought deferred contracts. A sharply lower national sales number further weighed on the market after the close of pit trade.

Class IV futures came under pressure and fell double digits after the close of pit trade, on the heels of a sharply lower NFDM  spot market, finishing a nickel lower which triggered limit down moves in nearby futures contracts.

U.S. dairy cow slaughter under federal inspection came in 4.8% higher than year ago levels, at 62,800 head. 371,200 head have been slaughtered year to date, a 4.8% year-over-year increase.

 A flurry of reports later today, including monthly Milk Production and Cold Storage, could settle this schizophrenic market.


Feb. 19 spot session results:

Block cheese: $1.5400 (unchanged)

Barrel cheese: $1.4850 (unchanged)

Grade A NFDM: $1.1500 (down 5.0¢)

Butter: $1.7225 (up 0.25¢)


Today's expectations:

• Class III & Cheese futures to open mixed

• Dry Whey futures to open steady

• Butter futures to open firm

• Class IV futures to open mixed

• NDFM futures to open soft


Grain futures

Yesterday’s action saw both corn and beans probe to the upside. Grain markets continue to chop away in range-bound fashion, as the trade turns its eye to the South American harvest and the battle for acreage here at home. As a result, upside potential will likely be capped. The trade will also be eyeing latest export numbers for a sense of demand.


Today’s expectation:

• Corn & Soybeans futures to open mixed


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