Skip Navigation Links
FCStone


Skip navigation links
Securities
Futures
OTC/Structured Products
Physical Trading
Risk Management
Investment Banking
Currencies

 Twitter Feed

 Blog Contributors

 James Burr
 Nathan Burk
 Robert Chesler
 Michael O'Dea
 Jason Sagebiel
 Dave Smoldt
 Ryan Turner
 Matt Zeller
 Douglas Jackson
 Kyle Schrad
 Jaime Miralles
 Brazil Planning, Research and Special Projects Group
 Jaime Miralles
(More Links...)

 Other FCStone Blogs

International Assets Holding Corporation > INTL FCStone Blog

World Food Production Blog

Unless otherwise noted, the posts on this blog should be construed as market commentary, merely observing economic, political and/or market conditions, and not intended to refer to any particular trading strategy, promotional element or quality of service provided by INTL FCStone Inc. or its subsidiaries (specifically FCStone, LLC). INTL FCStone Inc. is not responsible for any trading decisions taken by persons viewing this material. Information contained herein was obtained from sources believed to be reliable, but is not guaranteed as to its accuracy. These materials represent the opinions and viewpoints of the author, and do not necessarily reflect the viewpoints and trading strategies employed by INTL FCStone Inc. or its subsidiaries. Reproduction without authorization is prohibited. All rights reserved.

April 16
Spec funds on sidelines, for now – April 16, 2014

CORN: MIXED
Corn closed mixed yesterday despite wheat and beans closing up over 20 cents. Spec funds were on the sidelines yesterday. Longer range maps are warming up and drying out, giving the market some comfort that we will get the crop planted. The Russian-Ukraine military conflict made the market nervous yesterday. Basis is firming across a lot of the Corn Belt. With the Goldman Roll over, we saw CK/N tighten yesterday trading from 5 ½ to 6 ¼. It settled at 5 ¼ to 5 ½. Resistance in CK is $5.06 and then $5.20. Support is $4.97 and then $4.90. Corn felt weak yesterday. Beans and wheat were strong, but corn acted like it wanted to close lower. It feels the same this morning. Although we still look for the market to drift up towards $5.25, this morning’s tone is contradicting that. Look for a two-sided trade today.

Kyle Smith, Mike O'Dea, Ben Parks, Collin Hulse, Ingrid Gronlund

April 16
Morning Livestock Report – April 16, 2014

The lean hog market traded to a mixed result yesterday, settling between $1.15 lower and $0.47 higher; however, the day still managed to include some fireworks. After a fairly uneventful night session, the market exploded higher between 8:00 am and 9:00 am, including a near $2.50 spike in the June contract. There didn't appear to be any cause for the abrupt rally and, slowly, the market gave back much of its gains, especially after the morning pork report which showed losses in the cutout and all of the primals except the butt and picnic. It didn't get any better for the pork market as the day progressed, with the afternoon report showing even larger declines. The cutout was off a sharp $2.68, including a $7.01 loss in the belly and a $3.11 loss in the loin. Cash hog values were reportedly lower as well. The weakness in spot cash and pork values weighed on the market overnight.

Adam Stout

April 16
Morning Grain Comments – April 16, 2014

It’s been an exciting week thus far for soybeans, and for the old-crop new-crop spreads in particular; yesterday’s NOPA crush only added gasoline to the fire with a number above even the most bullish of trade expectations, while the export program still needs to basically shut down. USDA estimates in both categories are looking weak, with carryout already approaching historical lows despite the “residual” category wiped out and imports at record highs. Spot soybeans are desperately trying to ration away what demand they can. Corn continues to show its loyalty to the $5 mark—a 60-cent soybean rally has done basically nothing for the corn complex.

China’s National Bureau of Statistics reported the results of a 110,000 (!) farmer survey, showing planting intentions fairly steady for 2014—corn area was seen up 1.75% with rice up 0.15%, while wheat acreage is expected to drop by 0.56% and cotton plantings are seen down 6.77% this season.

United Kingdom customs data showed February wheat imports at 82k tonnes, the lowest monthly total of 2013/14 (July/June); that brings the cumulative total to 1.55 MMT, down from 1.87 MMT over the same span last season. Corn imports of 172k tonnes in Feb leaves July/Feb cumulative imports at 1.61 MMT, up from 1.11 MMT in the first eight months of 2012/13.

March NOPA soybean crush came in at 153.84 million bushels yesterday morning, up from the average 146.1 mbu estimate (and above the highest 153.0 mbu trade estimate, and up from 141.6 mbu in Feb and 137.1 mbu LY.

Matt Zeller

April 14
Morning Livestock Report – April 14, 2014

The cattle complex finished last Friday (and last week) with modest gains. Nearby April live cattle futures up $1.80 for the week, June up $0.97. We finally saw some cash cattle trade on Friday at mostly $147 live in the South and $240-242 dressed in the North; however, trade volumes were again very light, especially in the South, with feeders going home for the week asking $148 and packers acting uninterested. Packers continue to pull on large volumes of previously contracted cattle, and combined with a renewed interest in producer-packer basis transactions, it has left a smaller and smaller pool of cattle to trade in the negotiated market. Some in the industry asking if basis sales aren’t just a fleeting trend, but another long term shift in the industry away from the old school weekly negotiated market in addition to grid sales, formula sales, etc?? Weekly slaughter totaling 573k head last week, down from 583k head the prior week and 607k head last year. But despite the slower slaughter, the spot beef markets continue to erode, down a serious $7 in the choice and $5 in the selects last week.

Adam Stout

April 14
Morning Grain Comments – April 14, 2014

Each of the grains had their fun at various points in the overnight, but enthusiasm waned into the morning hours; extended maps will be watched closely in the coming days, with the trade looking for confirmation of a widespread planting window as conditions improve into next week.

South Korea’s NOFI bought 193k tonnes of optional-origin corn and 65ktonnes of optional-origin feed wheat, for Sept-Oct arrival; the corn was purchased at $269-270/tonne C&F, with the wheat at $289/tonne cost & freight.

Taiwan’s flour millers bought 92,550 tonnes of milling wheat from the U.S., for May-June shipment, in two consignments with various varieties.

Egypt’s GASC bought 230k tonnes of wheat in their latest tender Friday, for May 1-10 shipment, in the $299-301/tonne C&F range; 120k of that came from Romania, with 55k each from Russia and the Ukraine.

Russia’s Ag Min reported grain exports from July 1-April 9 at 21.488 MMT, up 47.5% from LY, and including 15.9 MMT of wheat and 3.2 MMT of corn.

Friday afternoon’s Disaggregated CFTC Report showed managed money traders posting net losses across the grains on the week ending last Tuesday (4/8); net corn (-6.5k) and bean (-11.8k) losses were both more than daily trade estimates were expecting. Producer and merchant moves were generally moderate on the week as well, with corn up 3.5k net and beans up 10.6k net.

Matt Zeller

April 14
Morning Dairy Comments – April 14, 2014

“I told my caddie, ‘You tell me what to do.’” – Bubba Watson

General Market News

· U.S. Stock futures choppy ahead of retail sales data

· Ukraine mobilizes as pro-Russian forces extend grip

· Glencore in $5.8 billion copper deal with Chinese group

· Dollar strengthens this morning

· Dairy industry rebounds at last in Northern San Joaquin Valley http://goo.gl/CXgDeq

· Bubba Watson claims second Maters title

Class III Futures
Nearby Class III futures bounced Friday on moderate volume amid renewed buying interest for both spot block and barrel cheese. With last week marked by an orderly but precipitous decline in spot market prices, buyers decided to wait until the last possible minute to buy against the prior week’s average.  That time was Friday’s spot session.  It also happened to coincide with short-term technical support for at least the June contract, which bounced off its 50-day Moving average Thursday and should indicate firming action for several days hence.  We’ll call the Friday’s nearby rally a timid bounce, but it was the second half continued its lower grind.

The deferred market developed a sluggish trade late last week, in part, on speculation of lost export business in the second half.  Also, market participants are paying close attention to milk receipts in the Midwest as temperatures warmed up here over the past week.  To date, the “flush” is not in full swing.  The price weakness, however, is welcomed by some commercial buyers who have largely spent the past few months concentrating on first half pricing issues. As for now, buyers are present but not aggressive in the second half of 2014.  On Friday the buying interest to note was in 2015.  274 of the 1,291 contracts or just shy of ¼ of trading volume exchanged hands thru December 2015.  Record prices so far in 2014 are beginning to push buy side budget activity 20 months out in search of lower price stability and certainty.  In high priced years we tend to see long-range budget setting start early.  This was the case in the spring of 2008 and it appears to be the case now.  Only time will tell if another 2009 is about to follow. 
With May Class III is pricing $2.0850 and the June contract is pricing $1.9550, the main question for the short term is will these futures price discounts to spot last.  The pattern has been that the futures market is right to keep a safe, discounted distance to spot – spot prices have followed futures down all month.  But some resurgence in spot market strength and therefore fresh strength to futures is expected to start the week. 

Dairy cow weekly cull rates continue to decline.  For the week ending March 29, dairy cow slaughter under federal inspection was down 8.4%, at 57,700 head, compared with the same period the previous year. Year-to-date slaughter levels are 8.6% lower than 2013 levels, with 767,600 head slaughtered.

We look for Class III to open 5-10 lower.

CME Weekly Block Chart

clip_image007

Cheese Futures
Cash-settled cheese futures took mirrored class III futures nearby strength and deferred weakness Friday.  Trading volume registered at 381 contracts and open interest rose by 192.  Like class III, a good chunk of trading (96 contracts) and new positions occurred in the first half of 2015.  Commercial buyers appear to find the high-$1.70 to low-$1.80 cheese price average available out there as a “value” entrée into hedges. 

The latest NDPSR report showed a price increase for blocks to $2.3450, a week over week increase of 8.05 cents. Sales were strong at 11,843,202 pounds, an increase of 436,477 pounds on a weekly basis. Barrel prices surged 4.1 cents on the week, to $$2.3216, on increased sales volume of 9,275,047. This is in contrast to the softening of prices on GDT that saw cheddar values fall 3.5%, to $4438/MT. February American cheese production was 341.3 million pounds, down 1.5% from a year ago. USDA weekly stocks were down 1.5% from the previous week and are 26.9% below last year. 
On April 8, Cooperatives Working Together (CWT) announced exports of 4.56 million pounds of cheddar for delivery between April and August 2014. According to the CWT news release, “Year-to-date, CWT has assisted member cooperatives in selling 40.792 million pounds of cheese, 31.903 million pounds of butter and 3.366 million pounds of whole milk powder to 27 countries on five continents. These sales are the equivalent of 1.098 billion pounds of milk on a milkfat basis.”

We look for cheese futures to open mixed.

Spot Session Results

Type

Trades

Settlement

Change

Bid

Offer

CHEESE

BLOCKS

6

$2.1700

UP 1/2

0

0

 

BARRELS

0

$2.0800

UP 1/2

1

0

NFDM

GRADE A

0

$1.9075

UP 3/4

1

0

BUTTER

GRADE AA

0

$1.9700

UNCH

0

0

clip_image009

Class IV Futures

Nearby class IV futures found some support on Friday and, inspired by strength in NFDM futures, closed steady to higher thru November.  While both domestic powder price weakness and slowing global demand are playing a large role in class IV weakness of late, stable butter prices continue to tug in the other direction.  We expect then to see more volatility this week and thru the end of April from class IV prices as the baton is passed from NFDM to butter in creating a high price class IV environment.  Additionally, the nearby June contract below looks to have bounce off of a meaningful 20-day weekly moving average. 
clip_image010
We look for Class IV to open steady. 

NFDM Futures

The leader of the price weakness over the past few weeks caught a bid Friday trading limit up – or 4 cents -  in the May contract to settled at $187.500.  This is the type of volatility you can expect from futures prices that carry deep discounts to cash market prices; bearish market bounces are swift and ruthless sometimes (before we get ahead of ourselves let me say that the jury is still out on whether or not this is the beginning of a bear market or simply a steep price correction).  Regardless, a key feature to NFDM last week was the consistent Open Interest declines for much of the week as market dynamics have triggered long-liquidation of futures.  There is a sense of additional price weakness yet to come and the trade is illustrating that.  Now we’ll have to see what GDT does this week as price declines on the global platform have been increasing for four events now.
NDPSR numbers show a slight decline over the past week, with a weighted price at $2.0524 on over 3 million more lbs. from the prior week at 23,869,288 pounds. 

The April NZX SMP contract settled at $3920MT, a $230/MT week over week slide. The April WMP contract settled down at $3910MT, a $55/MT decline since last Friday.

We look for NFDM futures to open steady/firm.

Butter Futures

Cash settled butter futures finished last week on a slightly weaker tone as spot butter prices have held steady at $1.97 for the past 7 trading sessions.  Bull markets don’t move higher on that type of information, so we’d call the recent futures trade a slight correction or a reluctant decline on a lack of fresh news.  We’ve beat the drum about tight cream supplies and the Easter sales bell curve.  What remains to be seen is a fundamental shift away from producing butter for export even amid softening EU butter prices.  Furthermore, if you go back in time the key feature to watch for in determining butter price weakness is milk supply.  U.S. milk supply, although impressive so far in California, has yet to see the kind of numbers one would expect from $20+ milk.  A 1.2% increase is not going to cut it.  And since we’re not likely going to build inventory of butter for months, the market continues to find underpinning support today.
NDSPR results showed a week over week increase in prices of 7.08 cents to 1.9697 on about half the sales of the prior week at 2,073,949 million pounds.  Cooperatives Working Together (CWT) announced export assistance of 2.48 million pounds of butter for the delivery period of April through August 2014.  USDA weekly stocks were up 3.9% from the previous week and are 43.7% above last year.

The NZX’s April AMF contract settled Friday at the price of 4,070/MT, up $70/MT week over week.

We look for butter to open mixed.

Dry Whey Futures

Dry whey futures finished out the week on a modestly stronger note with the May contract leading the way up 1.000 cent to 64.75.  The market generally seems in balance as far as discussions are concerned.  The bulk of the dry whey futures trading over the past five weeks have taken place in a relatively narrow band of prices.  It’s a sideways market with intermittent upticks in price for the very front month.  Meanwhile, trading activity for 2015 has picked up with 9 January to December packs trading at around 51.70 average last week.  Here again we see hedge interest developing many months into the future.

An uptick in prices on the weekly NDPSR numbers put dry whey at 0.6710 dollars/pound on stronger sales volume of 7,024,434 million pounds. 

We look for dry whey to open steady.

Grain Futures

The corn market ended the week lower on early reports of planting in southern Illinois, Iowa and parts of Kansas. Also, corn export sales were less than expected last week at 25.9 million bushels of old crop and 2.3 million new crop. Corn Shipments will shift into more focus over the next few months as the U.S. has shipped 945 of 1.750 million bushels. According to the math, shipments need to average 37.4 million bushels per week – something that hasn’t been done since 2010.

General concerns surrounding anything from banking to bird flu last week seemed to act as a “cooler” for the once red hot soybean market.  Old crop led the way to the downside as traders are concerned about reports of Chinese importers defaulting on additional cargoes. Chinese importers have defaulted on 500k tons (18.4 million bushels) of US and Brazilian bean purchases in recent days as crushers fail to get letters of credit open.

One interesting area to note is that the largest origin of U.S. imports is not from Brazil but from our neighbors to the north.  For the past 5 years soybean imports from Canada have averaged 11.5 million bushels. Canada had over 95 million bushels on hand as of Dec 31; the largest amount of any recent year.

On tap for today will be this afternoon’s Planting Progress Report. Expectations are for 2-3%. Delays will get more attention when we get into next month.

We look for corn to open 3 to 5 higher, beans to open steady to 7 higher, meal to open steady to 2.5 higher and wheat to open 8 to 12 higher.

Robert Chesler

April 11
Morning Grain Comments – April 11, 2014

Farmers are enjoying seeing the $5 mark hold down the line in corn, and enjoying at least initial planting preparations thanks to long-awaited favorable weather; conditions are going to become a whole lot less favorable later this weekend, though, as the cold and wet pattern returns.

Egypt’s GASC is in for wheat again today, for May 1-10 shipment.

Algeria bought 450k tonnes of milling wheat at $315-316.50/tonne C&F, in an international tender late yesterday, for May-June shipment; it was technically optional-origin but likely sourced from France, their main supplier.

A USDA attaché in Argentina pegged ‘14/15 wheat output at 12.0 MMT, up from 10.5 MMT in ‘13/14 due to increased plantings; barley and corn acreage are seen falling in ‘14, with the ‘14/15 corn crop down 2 MMT to 22.0 MMT.

Brazil’s Ag Ministry raised their 2013/14 soybean production estimate this month, from 85.4 to 86.1 MMT (still below the USDA’s 87.5 MMT), thanks to an upward adjustment in planted area of over half a million acres. Corn output also rose slightly from March, from 75.2 to 75.5 MMT (vs the 72 MMT USDA), thanks to a strong outlook for second-crop production.

Matt Zeller

April 11
Morning Dairy Comments – April 11, 2014

General News

· European & Asian stocks followed (Nikkei at 2014 low) the U.S. decline in stocks yesterday and the S&P futures this morning are showing major signs of further weakness; it could be a blood bath

· JPMorgan profit (-19%) & revenue tanks as does stock

· China bond sale disappoints raising concerns over their ability to lessen debt levels

· France bans late hours work emails to keep 35 hour work week safe

Class III, Cheese & Dry Whey

The legs continue to be swept out from underneath the Class III futures market as unrelenting selling pressure was experienced across the board on the heels of another soft spot session that saw blocks lose 2 ¼ cents, to $2.1650, and barrels remain unchanged, at $2.0750. For the session alone, the May contract lost 23 cents, to settle at $21.22, June tanked by 47 cents, to close at $19.91, July took the most heat and retreated 49 cents to $19.60, and August closed 39 cents in the red, at $19.55. Losses weren’t quite as extreme in the fourth quarter, but some ground was given back nonetheless, as that pack average closed down 11 cents on the day, at $18.80. What a difference a week makes as many of the nearby contracts have retreated over a dollar from the highs they put in just last week. Spot prices have seen rather drastic corrections as well, with blocks shedding 25 ¾ cents, and barrels trimmed by 15 ½ cents since last Thursday. 

I went to sleep last night with three words reverberating through the chambers of my mind…”where’s the bottom?” If I had a dollar for every time I’ve been asked that question over the past week, I wouldn’t be writing this commentary, I’d be reading it on a yacht in the Caribbean. It is a valid question though, but a better one might be, “where’s the tourniquet?” is it $2.00, $1.90 or $1.75…?

Fundamentally, the moves makes sense, as international prices have weakened, production has been ramped up both domestically and in Europe, and the international demand that fueled the market for so long, has dried up. Bi-weekly international prices released by Dairy Market News reflected continued price weakness (see charts below), there have been four consecutive weak GDT auctions in which large buyers have been noticeably absent, and U.S. prices are, or have lost global competitiveness. High prices cure high prices.

Technically, the market has turned over as losses in most Class III contracts have broken short term support levels and now are threatening longer term support thresholds. These levels need to hold, or the herd mentality will kick into full swing and it’ll be a race to jump in a lifeboat as the ship is clearly going down. In other words and in my humble opinion, if the market finishes the week on a soft tone and closes below critical moving averages, it could be lights out (see charts below). It does bear mentioning that the market is now in oversold territory, both on RSI and Stochastics. However, markets can remain in such a state for extended periods of time. A case in point would be the overbought status that lasted for weeks on the way up. Futures are also still trading at a discount to cash, which dictates one of two potential scenarios. Either cash holds and futures rally, or weakness is here for a while and lower prices are yet to come. 

clip_image005

Cash settled cheese futures followed suit with Class III and settled lower throughout 2014. The pullback in prices now has the market trading sub $2.00 from June on out. Volume was strong, with an estimated over 300 trades.

Dry Whey traded mostly lower on respectable estimated volume of over 40 contracts changing hands. Though the trade has largely been range bound, further pressure on Class III and cheese has the potential to drag whey lower.   The Central Mostly Dry Whey powder price was up 0.25 cents from the previous week at 63.75 cents, while the Western Mostly price was 0.12 cents higher at 64.75 cents. 

For the week ending March 29, dairy cow slaughter under federal inspection was down 8.4%, at 57,700 head, compared with the same period the previous year. Year-to-date slaughter levels are 8.6% lower than 2013 levels, with 767,600 head slaughtered.

We look for Class III, cheese and whey all to open lower.

Spot Session Results

Type

Trades

Settlement

Change

Bid

Offer

CHEESE

BLOCKS

1

$2.1650

DN 2 ¼  

0

1

 

BARRELS

0

$2.0750

UNCH 

1

0

NFDM

GRADE A

0

$1.9000

UP 1 ¼ 

1

0

BUTTER

GRADE AA

0

$1.9700

UNCH

0

0

clip_image007

Class IV, NFDM & Butter

Class IV futures traded mixed, after NFDM gained 1 ¼ cents on the spot market to get back to the 1.90 level and butter finding some equilibrium at 1.97. Slight gains were realized in the second quarter, but weakness was experienced from August through September, all on light volume. International prices continue to drift lower and weigh on the market. If downside price action is a concern, strategies should be in place, or put in place to safeguard against any continued weakness.

NFDM futures traded mixed on heavy volume yesterday as the market searches for direction. International price weakness has been the recurring theme across the dairy complex, and there is certainly no exception here. As demand for product has waned and prices have softened, buyers are taking a more cautious, “hand-to-mouth approach to the market, as further price weakness is expected.

Butter futures traded mostly lower in reaction to softer international prices and an unchanged spot market. Cash prices have remained unchanged since last Thursday, at $1.97. The market is trying to find a balance between softening seasonal demand and tight cream supplies, as well as the soft tone to the international market.

We look for class IV and NFDM to open lower with butter steady.

Grain Futures

Grain markets shrugged off yesterday’s USDA numbers and traded lower on the heels of soft export numbers, fund selling and reports of Chinese crushers defaulting on soybean cargos. The news of the defaults rippled through the trade and sent the May contract tumbling by as much as 19 cents, before recovering slightly to close 13 cents lower, at $14.82 ¼. The news conjures up memories of 2004, when crushers had been aggressive purchasers, resulting in a price spike that quickly destroyed their profit margins and led to default and a crash in the market. Whether or not the same scene plays out again is anybody’s guess. But, we do know that there are currently more cargoes en route to Chinese ports, and the possibility of further defaults is not an implausible scenario. Funds were net sellers of 6,000 contracts, but still hold a substantial long position. If they decide to trim the load a bit, things could get ugly in a hurry, as there is plenty of room to roam to the downside (see chart below). Corn continues to gravitate to the $5.00 level and will likely hold there until the weather picture comes into better focus. The May contract lost a penny to close at $5.01 ¼, while December settled down ½ cent at $5.05. Funds were even for the session, but do hold a sizeable long position. May wheat continues to struggle to find traction and shed 6 ¾ cents to close at $6.62 ¼.    

clip_image012

We look for corn to open firm and beans/wheat soft. 

Robert Chesler

April 08
Looking forward to the NASS crop ratings today – April 8, 2014

WHEAT: STEADY
The wheat market is quiet this morning on light volume overnight. Weekly wheat inspections totaled 606.1k tonnes for the week and now need to total 680.5k tonnes/week to meet USDA estimates. EU export licenses totaled 596k tonnes for the past week, bringing the total to 23.3 mmt. EU exports for the 2014/15 crop are estimated to total 25 mmt and as demand remains strong, the EU is concerned about stocks tightening up. Iraq has tendered for an unknown quantity of hard wheat. Kansas crops declined another 3% to 32% G/E with OK ratings down 2% to 15% G/E. The NASS national crop ratings will be out this afternoon at 3pm. Outside markets mixed with the USD down 39 points, the S&P up 1 point, and crude is up 79 points.

As of the break, KWK14 was 1 ¾ lower.

Kyle Smith, Mike O'Dea, Ben Parks, Collin Hulse, Ingrid Gronlund

April 08
Morning Dairy Comments – April 8, 2014

Class III, Cheese & Dry Whey
After Friday’s limit lower close the class III market got started quickly Sunday night with May trading down as much as 73 cents early Monday morning. When the spot market fell by 5 cents on the block while holding steady in the barrel prices mostly held the 50 to 60 lower level they had settled into pre-spot. There was a little more movement in the June-August contracts which moved from ~20 lower back near unchanged but activity slowed sharply post spot. It is interesting to note that the June through August contracts all seem to be finding some support near the $20.00 mark while as of today the spot equivalent on class III still sits just above the $23.50 mark.

To this point the downside move in the blocks could easily be attributed to simply a correction the very wide block/barrel spread via the path of least resistance. Today’s spot session should pull back the curtain to tell us if this is a truly a soft marketplace or if the move lower in blocks was simply an effort to correct that spread and if it turns out to be simply a spread correction, watch out because May will have a chance to rally just as quickly as it fell the past two sessions.

Cheese futures traded very much in line with their Class III counterparts but volume was extremely strong with over 200 trades taking place. May was down 0.049  while other contracts were mixed from -0.011 to +0.005 on the day.

The overnight session opened with prices reaching double digit gains before 10 pm Chicago time. This morning we look for Class III and cheese to open firm, with whey mixed.

Spot Session Results

Type

Trades

Settlement

Change

Bid

Offer

CHEESE

BLOCKS

2

$2.3000

DOWN 5

0

1

 

BARRELS

0

$2.2250

UNCH

0

0

NFDM

GRADE A

0

$1.9975

UNCH

0

0

BUTTER

GRADE AA

0

$1.9700

UNCH

0

0

clip_image002

Class IV, NFDM & Butter

Class IV futures traded solid volume of near 75 contracts to open the week and prices were mostly under pressure from the class III sell off as well as some product pricing weakness. Only September closed higher on the day +5 cents while other contracts were steady to 16 lower with April the exception down 21 on the day with good volume of 36 contracts. It appears that both butter and NFDM are in for some continued weakness so with class III under pressure we’d expect to see a continued dip for the class IV market as well.

NFDM prices were lower to start the week as good volume of near 100 trades took place futures settled steady to -1.475 cents on the day. Price pressure reportedly remains on the physical marketplace with some participants telling us they expect to see a pretty sizeable move in the CWAP prices with later today or next week.

The spot butter market opened and closed unchanged today after weakness late last week. Futures however followed through on the late week softness settling 0.025 to 0.750 lower from May through Oct. April actually gained 0.500 while December was down 1.000. We would look for more loads to make their way to the spot session this week.

We look for class IV and the products to open mixed this morning.

Grain Futures

The grain markets had a mixed day with prices moving lower early but recovering into the close. Corn finished -2.5 cents in May at $4.9925, while beans continued to see strong profit taking in the old crop/new crop spreads with May beans down 9.5 cents to $14.6425 while new crop beans were down just 0.25 cents at $12.0825. Wheat prices found some support after rains were lighter than expected in the dry SW wheat area closing up 6.5 cents at $7.0625. All eyes tomorrow will likely be on the pending USDA report due out Wednesday while keeping one eye on the weather. Estimates for Wednesday included below. Weekly crop progress reports were slated to start yesterday afternoon but were delayed and the expectation is they will be released this afternoon at 3 pm central time.

We look for the grain complex to open slightly lower across the board this morning.

clip_image004

clip_image006

Robert Chesler

1 - 10Next