Class III & Class IV futures post gains

FCStone provides a recap of Monday’s dairy market closings, and reviews current trends and factors affecting the markets.

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Class III and cheese futures maintained their firm footing and largely finished in the green. A bit of month-end short covering trumped a lower spot call that saw blocks trim back 1.25¢ and barrels shed a penny to start the week. Class III volume was on the light side, however cheese futures traded a heavier clip and saw good overall distribution. Gains were limited to generally within a dime through mid-2016, with some double-digit postings in the far deferred time frame.

The holiday doldrums are rapidly approaching and the market feels as though it’s about to enter into a congestive trade that will work to consolidate the recent move before deciding on direction moving forward. Dry whey bore the brunt of sell-side interest and fell back into the red on moderate volume.

Nearby Class IV contracts posted double-digit gains courtesy of a sharply higher butter trade, as well as higher NFDM postings. By the closing bell, butter futures through February were close to a nickel in the green, with residual strength trickling to March-April, and a mixed tone further out. The spot price remains ultra-quiet and pinned to $2.90/lb. NFDM futures also tracked to the upside, as the spot price firmed to 73.75¢/lb. and triggered a round of month-end short covering that saw contracts through mid-2016 post gains on solid volume. There remains the potential further price recovery in the short run, but the sustainability of such a move remains questionable.

Grains were a mixed bag, with corn and beans gaining to start the week, while wheat slipped into the red. Corn has now retraced to levels of initial resistance north of $3.70/bushel, likely the result of the lack of farmer selling working to firm basis levels. Likewise, beans have rounded a bottom and are now past the first two hurdles of resistance, and are now looking poised to challenge more formidable levels.

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