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Class III and cheese futures saw a bit of a bounce we’ve been discussing over the past couple days. However, the bounce only occurred through Q1 2016, with deferred contracts remaining under pressure. That worked to flatten out the forward curve a bit amidst another soft spot session.
Blocks shed a penny to $1.56/lb. with four loads changing hands, while barrels trimmed 2.75¢, to $1.4225/lb. on six loads. The action didn’t do anything to correct the spread, which widened to 13.75¢. The $1.40/lb. level will be critical from a barrel price standpoint in the coming days, as psychological damage will be incurred if it slips into the $1.30s. If spot levels hold, look for a bit of continuum to the upside. However, that will likely be construed as a selling opportunity, with renewed pressure brought to the market. Trade will likely want to take a peek at Thursday’s milk production numbers before weighing in.
Either it’s a case of no interest or fear – maybe a little of both as far as the spot price of butter is concerned. Another day passed with no price movement, a standoff if you will at $2.8850/lb. We’re going on two weeks with no activity in this space, sparking explosive upside momentum in the December contract, and triggering expanded 10¢ limits in tomorrow’s trade. NFDM traded mixed to mostly lower on a steady spot session.
Grain markets were soft Wednesday, as both wheat and beans fell about a nickel, while corn managed to post mixed results, settling fractionally on either side of unchanged. Basis levels remain firm, and futures largely range-bound. Export sales are scheduled to be released Thursday morning at 7:30 (Central).
Wall Street is wearing green as the Dow is on its way to triple-digit gains, after Fed minutes suggested a rate hike is on the docket in December. Bonds are mostly lower as a result, while the U.S. Dollar has traded on either side of unchanged. Precious metals are mixed, with gold rebounding off multi-year lows; copper is trading lower; while crude oil continues to struggle at $41/barrel.
INTL FCStone Dairy Division offers comprehensive education, advice, and market execution to the dairy industry in the U.S. and abroad. Please visit www.intlfcstone.com or call 800-504-5620 for more information.
