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

Class III futures settled mixed through 2015, but 2016 values plummeted. Although this seems to be an aberration, it’s important to note that interest has picked up in the 2016 contracts.  Currently, 1H 2015 contract average is $16.27/cwt., bouncing slightly off its lows after a week of significant losses. Full year 2015 is trading at $16.64/cwt.

Overall, the tone remains bearish. Buyers are cautiously procuring product in light of the recent price declines. However, it would come as no surprise if we saw some choppiness due to “hand to mouth” spurts as buyers fulfill immediate needs. While, markets seem to be plugging along, one could anticipate a price movement is on the horizon, with a more robust decline in Q1 looking more and more likely.

CME butter prices held firm yesterday.  Futures, in turn, traded limit up in January, as the front months continue to be discounted to spot. Retail and foodservice demand is said to be strong. Oceania butterfat prices were firmer on yesterday’s GDT auction. Some traders note that it will be more prohibitive to import butterfat into the U.S. once prices fall below the $1.70/lb. mark with tariffs and other costs considered.

Nonfat futures settled mixed on the day. CME NFDM prices are finally coming more in line with global prices, making it competitive in the export markets. SMP prices on the GDT yesterday were firm across the board.

 

Dec. 3 spot session results:

Block cheese: $1.6600 (unchanged)

Barrel cheese: $1.5800 (down 0.75¢)

Grade A NFDM: $1.1100 (unchanged)

Butter: $1.9850 (unchanged)

 

Today's expectations:

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

• Class IV, Butter & NFDM  futures to open mixed

 

Grain futures

Corn traded lower during most of yesterday’s session, but rallied near the close to finish a penny higher.  Support came from another good ethanol report, an announced export sale, and Informa lowering its South American production estimate.  Soybeans also saw a rally at the end of the day. The soybean market has dropped 71¢/bushel in the last five trading sessions.

There is starting to be more talk in the market about next year’s planting mix. Most surveys are showing a significant increase in soybean planting, at the expense of corn.

 

Today’s expectation:

• Corn & Soybean futures to open higher

 

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