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

Class III futures finished February on a bullish note, with the March-December contracts surging between 9¢-38¢ higher. The 2Q 2015 futures pack average gained 33¢ Friday to close out the month at $16.31/cwt., posting a week-over-week gain of 56¢ and increasing 63¢ from the end of January. 

So what does this tell us about the market after such a strong weekly performance? The general rule regarding open interest and trading volume suggests an increase in both trading volume and open interest during a price rally would be a bullish indication, and prices should continue to move higher to start the week. The greater the trading volume and increase in open interest during a market move, the higher the probability the current trend will continue rather than reverse. The interesting thing from Friday’s session, which provides some caution, is that volume was lighter on the way up than when trading off the day highs.

Cheese futures climbed higher Friday, thanks in part to the flurry of trading activity in the spot Barrel market.  The 2Q 2015 futures pack averaged $1.6647/lb., tallying a week-over-week gain of 4.97¢ and a monthly gain totaling 2.44¢. 

Dry whey contracts settled mixed, but mostly higher.  The 2Q 2015 futures pack averaged 45.4¢, gaining 1.6¢ week over week and 6.2583¢ month over month.

Class IV contracts benefited from the strong rallies in both the butter and NFDM markets.  The 2Q 2015 futures pack averaged $16.26/cwt., adding 17¢ over the previous week’s close and sitting 40¢ higher than the end of January.

Butter futures rallied Friday.  The 2Q 2015 futures pack averaged $1.823/lb., marking a week-over-week gain of of 1.59¢, but just 0.91¢ since the end of January. 

NFDM futures settled between unchanged and limit higher after a 7¢ surge during the spot NFDM session.  The move higher in the spot price brought the value in line with the March futures contract, yet both sit at a steep discount to the remaining nearby future contracts.

   

Feb. 27 spot session results:

Block cheese: $1.5450 (unchanged)

Barrel cheese: $1.4925 (up 0.75¢)

Grade A NFDM: $1.1550 (up 7.0¢)

Butter: $1.6950 (up 4.0¢)

 

Today's expectations:

• Class III futures to open 5¢-15¢ higher

• Cheese futures to open o.5¢-1.5¢ higher

• Dry Whey futures to open 1.0¢ lower

• Butter futures to open steady to a penny higher

• Class IV futures top open steady

• NDFM futures to open steady to 1¢ higher

 

Grain futures

Grain markets rallied Friday as concerns regarding the trucker strike in Brazil and the delays in providing exportable grains to ports support U.S. products. 

 

Today’s expectation:

• Corn & Soybean futures to open slightly higher

 

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