Fresh cheese appears to be abundant as a steady string of offers for both blocks and barrels appeared again in today’s spot session. Buyers were engaged, with twenty-five lots of blocks trading hands. However, they weren’t willing to take the product at higher prices, gobbling up the volume along the way to $1.5950 blocks – the first sub-$1.60 price since mid-March. In the aftermath, July Class III closed below $17.00 at $16.96 (that is $3.20 off its high of $20.16 in late May). This drop in price ended up growing the premium in futures as the curve only traded around 1-3 cents lower. This results in a carry premium ranging from 10 to 40 cents across the curve – a strong incentive for anyone who can store product to buy spot and sell futures against the inventory to lock in the price difference.
Today’s Highlights from Ever.Ag’s Know Your Markets
Spot blocks plunged to their lowest level since mid-March, closing at $1.5950 per pound, down 5.5 cents, with 25 loads exchanged — the busiest single trading day since March 2011. Barrels also weakened, slipping 4.25 cents to $1.6150, with five lots traded. The CME butter market firmed slightly, gaining one cent to $2.5350, though no trades were reported. Spot NDM dipped a cent to $1.2500, with one lot exchanged. Dry whey rose 1.25 cents to $0.5725 per pound, with two loads trading.
Class III futures continued to slip, with July down 30 cents to $16.96 per hundredweight. Second half contracts settled at $18.06 per hundredweight, a 10-cent loss. Class IV also declined, despite the rise in spot butter. Second half futures dropped to $19.48 per hundredweight, shedding 14 cents.
Milk powder prices are still on the decline in New Zealand. At this week’s GlobalDairyTrade Pulse event, WMP dropped to $1.78 per pound, down 3.2% versus the previous main auction. SMP slipped to $1.23 per pound, down 2.5% compared to the last week’s main event.
Ever.Ag - The risk of loss trading commodity futures and options can be substantial. Investors should carefully consider the inherent risks in light of their financial condition. The information contained herein has been obtained from sources to be reliable, however, no independent verification has been made. The information contained herein is strictly the opinion of its author and not necessarily of Ever.Ag and is intended to be a solicitation. Past performance is not indicative of future results.
