This market commentary is provided by the Dairy Division at FCStone in Chicago, Ill.

April 28 spot session results:

Block cheese: $1.6100 (unchanged)

Barrel cheese: $1.6175 (down 0.25¢)

Grade A NFDM: 93.00¢ (unchanged)

Butter: $1.8600 (up 1.0¢)

 

With the American Dairy Products Institute (ADPI) conference wrapping up in Chicago, market participants get back to business. The trade will be faced with balancing the industry sentiment moving forward, a weakening technical picture, bearish fundamentals and a spot cheese market that has proven to be quite resilient of late.

In general, opinions from those I’ve spoken with at the ADPI conference have been both bullish and bearish. Bearish fundamental headwinds have been widely broadcast for some time, and while domestic prices have remained buoyant since January’s lows, a revisit of that territory feels like it’s in the offing. On the other side of the equation, the fact that the U.S. Dollar Index has rolled over of late could prove supportive to commodities.

The Class IV market proved resilient in yesterday’s trade, with a both June and July posting double-digit gains on the heels of initial strength stemming from NFDM and mixed sentiment in butter. The differential between the Class III/Class IV spread has also widened to the point where there could be incentive to close that gap a bit as well.

The headline grabber would be the NFDM market, as prices garnered traction and probed to the upside in early trade, only to be ambushed by sell side interest and finish in the red. The market has traded sideways of late, as the spot price remains steady. However, yesterday’s rejection of higher levels suggests a cap is in place. The penny uptick in the spot price of butter failed to ignite additional upside momentum in the futures market.

 

 Futures outlook

We look for a softer opening for Class III, Cheese & Dry Whey.

We look for a mixed opening for NFDM; steady to stronger for Butter.

Grain futures

The grain trade has struggled for identity of late, as corn futures continue to slide south, posting its fourth consecutive lower settlement yesterday. The trade is largely expecting the planting pace to ramp up in the coming days and be somewhere in the vicinity of 50% completed by this time next week. The technical picture remains firmly in the clutches of the bear, and unless a shift in the current dynamic is brought into play, a retest of October 2014 lows may in store.

It’s much the same story for the soybean market, as new crop futures have drifted sideways for the better part of the past two weeks. We expect prices to continue to migrate lower as the planting season progresses.

 

We look for a mixed opening in the grain complex.

 

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