Editor’s note: This market commentary is provided by the Dairy Division at FCStone in Chicago, Ill.
USDA will release November’s milk production figures this afternoon. We’re looking for a 4.6% increase in U.S. production and a 4.4% increase for the 23-state category. A 4.5%-5.0% increase in production is largely expected heading into the report. Generally, anything north of 5.0% will be perceived as bearish, while a percentage increase of less than 4.0% – while not bullish per se – will be seen as less than expected, and therefore bullish versus expectations.
Despite yesterday’s bounce in Class III futures prices (up 24¢-48¢ January-May 2015), it’s still a bearish world. One day is “noise”; a week, a month – those are trends. Likewise, spot cheese stopped falling, money moved and speculative shorts continue to cover some positions. Don’t read more into it; we won’t.
Editor's note: To view how yesterday's market activity impacted potential margins under the Margin Protection Program for Dairy (MPP-Dairy), visit http://dairy.wisc.edu/MPP/. Deadline to enroll in MPP-Dairy is today, Dec. 19.
Dec. 18 spot session results:
Block cheese: $1.6075 (unchanged)
Barrel cheese: $1.5875 (unchanged)
Grade A NFDM: 99.0¢ (down 0.5¢)
Butter: $1.6000 (up 4.5¢)
• We look for a generally mixed open for dairy complex today. We expect that the bounce isn’t over in cheese, and the declines are nearing a slowdown in NFDM.
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