We have two big reports (Milk Production and Cold Storage) coming up this week, which may shed some light. While we struggle to believe U.S. prices could strengthen significantly with what we’ve seen from the International market, we must acknowledge the potential.
The Class III market closed out the week with gains, as both the spot block and barrel prices moved higher. May finished the week at $15.99/cwt., up 22¢ from the prior week. Nearby months showed the largest gains, as deferred contracts were just a few pennies higher week over week.
The cheese future market followed the Class III market higher on Friday, but open interest was actually lower, indicating there was some short covering taking place. That generally isn’t a great sign that a market is ready to run higher.
Prices were higher to close out the week on Class IV, as butter prices traded sharply higher, and the persistent strength in the butter market seeming to finally spill over into NFDM. Butter futures contracts traded to limit up in the nearby months. As the market has pushed back above $1.90/lb., volume has picked up. NFDM prices finished the week on a higher note, though volume was relatively light.
Futures outlook
We look for a higher opening for Class III, Cheese and Dry Whey.
We look for a mixed opening for NFDM, Butter firm, a quiet opening for Class IV.
April 17 spot session results:
Block cheese: $1.5750 (up 0.25¢)
Barrel cheese: $1.6250 (up 1.0¢)
Grade A NFDM: 92.50¢ (unchanged)
Butter: $1.8025 (up 3.5¢)
Grain futures
Grains put in a mostly firmer session on Friday. Corn was virtually unchanged on the week, +2.75¢; soybeans found some strength, closing up 17.25¢. The charts still look mostly bearish longer term. Seasonally. we typically see a soybean market rally heading into the summer, but with a big South American crop and the higher planted acreage expectation for the U.S., perhaps we will buck the trend.
The Upper Midwest should see a big jump in planting progress. Some are projecting more corn acres to be planted. Time will tell,but for now there seems to be little to trigger a breakout move for corn and soybeans.
We look for a slightly higher opening to the grain complex.
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Source: DairyHerd
