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

The 1H 2015 Class III pack is currently trading below $15/cwt., hovering near $14.90/cwt.  While we should be in the midst of a “post-holiday hangover,” markets have crept slightly higher recently, undoubtedly a result of some pipeline refilling after the holiday rush. However, bears are in control by virtually all measurable indicators. 

With barrels at a slight premium to blocks, we’ll see how inverted we get before action corrects the spread.

Dry whey prices slipped lower yesterday as the market tone remains weak.  As the cheese pipeline refills whey supplies continue to build.  The weak tone is expected to persist in the near term.  

NFDM moved as much as 2¢ lower in nearby March yesterday as weakness persists. The last time we sat below the $1.00/lb. level was Aug. 7, 2009. Given the time of year, we could expect to see some further decline.  International weakness continues to weigh on the market. Right now, the weather in Oceania seems to be the only potential bullish factor, although a minimal factor.

Butter continues to trade sideways. Production, we are hearing, is steady with supplies building along seasonal lines.  The potential for butter to move lower is there. The strong US Dollar might be poised for a technical pullback, but for the physical markets the damage is done. Some shortages in Asia and pipeline refilling continue to be supportive of this market in the near term. Going forward, expect some downside movement as demand slackens and inventories build..

 

Jan. 12 spot session results:

Block cheese: $1.5900 (unchanged)

Barrel cheese: $1.5450 (up 5.0¢)

Grade A NFDM: 98.75¢ (unchanged)

Butter: $1.5400 (unchanged)

 

Today's expectations:

• Class III & Cheese to open mixed to firm

• Dry Whey futures to open soft

• Class IV, Butter & NFDM futures to open soft

 

Grain futures

Following yesterday’s USDA reports, corn settled up slightly, while beans plummeted some 38¢ on the day.  Corn looks like it’s trying valiantly to put in a bottom: March tested trading below $4 yesterday, but ultimately closed back above that level.

 

Today’s expectation:

• Grain futures to open slightly higher across the board

 

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