This market commentary is provided by the Dairy Division at FCStone in Chicago, Ill.
Class III futures trading was active despite the holiday weekend, settling between unchanged and 13¢ higher, with strength derived in part from gains in both spot blocks and barrels. The majority of trading activity occurred in the September through November 2014 contracts. The 4Q 2014 futures pack average was $21.22/cwt., adding 36¢ week over week.
Cash-settled cheese futures posted over 300 total trades heading into the long weekend. The October and November contracts posted the lone gains, while the remaining contracts settled between unchanged and lower. The 4Q 2014 futures pack finished the week at $2.0633/lb., increasing 4.70¢ from the week prior. Cheese production remains strong across the country, yet consistent, strong demand continues to support prices.
Dry Whey futures were active. The 4Q 2014 futures pack average was 1.141¢ lower week over week.
Class IV futures ended the month with gains. The 4Q 2014 futures pack closed at $20.28/cwt., increasing 34¢ from the previous week and $1.04 since Aug. 8.
The 4Q 2014 NFDM futures pack added 6.25¢/lb. from the week prior.
The spot butter price gained a total of 6.50¢ on the week.. The 4Q 2014 butter futures pack average gained 4.167¢ for the day, but fell 2.675¢ from the previous week.
Milk production per cow in the Midwest continues to trend seasonally lower, though reports of some increased herd sizes helped to temper the declines. Production in the Northeast and Mid-Atlantic regions increased marginally, as cooler-than-normal temperatures and favorable feed costs aided production. In the Southeast production has been declining as hot temperatures are impacting cow comfort. California milk production is reportedly up year over year, as a break from triple-digit heat has improved milk receipts, but temperatures are moving higher again. In the other Western and Northwestern states milk production is trending seasonally lower.
Australia’s milk production results for the first month of the new production year (July) were released, estimated up 1.5% year over year.
August 29 spot session results:
Block cheese: $2.3300 (up 1.0¢)
Barrel cheese: $2.3450 (up 2.0¢)
Grade A NFDM: $1.3250 (unchanged)
Butter: $2.7550 (up 0.5¢)
Today’s expectations:
• Class III to open higher
• Cheese to open steady to higher
• Dry Whey to open quietly
• Class IV to open steady
• Butter to open steady to higher
• NFDM to open lower
Grain futures
Grain markets continue to work lower on continuing expectations of record corn and soybean crops. Southern states are reporting record yields in the early harvest for both the corn and soybeans. Some estimates for the corn yield now call for 2-3 bushels above the August USDA estimate of 167.4/bushels per acre. The European Union corn crop is estimated to reach 70 million metric tons (MMT), 2.5 MMT above the recent USDA estimate and 6 MMT higher than last year. There is some talk of credit problems in China.
Today’s expectation:
• Corn to open steady to slightly higher
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