The argument can and shall be made that buy side business should add some support after the monumental disaster of 2014. Buyers of dairy products continually felt squeezed as their budgets and forecasts were utterly and completely wrong. But it still feels premature to suggest we have found anything close to a bottom in U.S. dairy prices. Trying to temper the bearishness of the market is becoming more and more foolish.
After a momentary move upward early in the day, Class III futures quickly weakened, forcefully erasing any positive price action and continuing to march lower. The full year 2015 pack finished 29¢ lower, at $15.74/cwt., with the last three quarters of the year taking the brunt of the weakness, down an average of 36¢.
Cheese futures weathered the Class III storm, with only 2Q 2015 showing significant weakness, closing 3.3¢ lower, at $1.6080/lb.
Whey prices sustained another shellacking, with futures settling lower across the board. World protein prices continue to erode, and whey is no exception. Export prospects are lackluster, and there has been talk of export orders being cancelled.
Spot butter plummeted 23¢, to $1.61/lb. 1Q 2015 butter futures were hit hard, while deferred contracts treaded water. Oceania fat prices on the GDT auction were firm. Domestic butter prices are still not competitive on the world markets. Relative to the rest of the domestic dairy complex butter, has more room to correct to achieve parity with world prices.
Nonfat dry milk was offered down again, and weakness was spread across the futures board. Class IV also took a punch, settling 16¢ to 72¢ lower. Domestic end users are finishing up inking their annual supply contracts. Some buyers are choosing to leave a portion of their needs open, and are confident they can secure product on the spot market at lower prices.
Dec. 16 spot session results:
Block cheese: $1.6075 (up 0.25¢)
Barrel cheese: $1.5775 (unchanged)
Grade A NFDM: $1.0050 (down 5.5¢)
Butter: $1.6100 (down 23.0¢)
Today’s expectations:
• Class III, Dry Whey & Cheese futures to open lower
• Class IV, Butter & NFDM futures to open lower
Grain futures
Grain markets are a tale of two cities. Wheat continues to grind higher on Russia fears, while corn and soybeans continue lower.
Many believe corn continues to defy gravity as it stubbornly stays above $4/bushel. Multiple sources indicate China is will announce approval of MIR162 GMO corn and DDG imports while their trade delegation visits Chicago. There are rumors that they have already purchased both for import. Soybeans continued lower, as favorable South American weather continues to bolster the idea of record yields. Today’s expectation:
• Corn, Soybean & Soybean Meal futures to open firm
The trading of derivatives such as futures, options, and swaps may not be suitable for all investors. Derivatives trading involves substantial risk of loss, and you should fully understand those risks prior to trading. Any reference to past performance is not indicative of future results. All references to futures/options trading are made solely on behalf of FCStone, LLC. All references to swap execution and bi-lateral swaps are made solely on behalf of INTL Hanley, LLC. FCStone, LLC will clear swaps when applicable. Swaps are only available to eligible counterparties. All observations of economic, political and/or market conditions are not intended to refer to any particular trading strategy, promotional element or quality of service provided by INTL FCStone Inc. and its subsidiaries and should be construed as market commentary. All recommendations to buy or sell a specific derivative or forecasting statements regarding market activity and the pricing thereof should be construed as a solicitation in any jurisdiction in where such an offer or solicitation would be legal. Proper context and guidance including but not limited to the particular trading objectives, financial situations and the needs of the intended audience were taken into consideration when this recommendation was prepared. Contact your account representative for specific advice to meet your specific trading preferences or goals. These materials represent the opinions and viewpoints of the author, and do not necessarily reflect the viewpoints and trading strategies employed by INTL FCStone Inc. and its subsidiaries. Sources of information believed to reliable were used in preparing such observations, and no guarantee or representation regarding the accuracy of those sources has been made. INTL FCStone Inc. and its subsidiaries are not responsible for any redistribution of this material by third parties, or any trading decisions taken by persons not intended to view this material.
After a momentary move upward early in the day, Class III futures quickly weakened, forcefully erasing any positive price action and continuing to march lower. The full year 2015 pack finished 29¢ lower, at $15.74/cwt., with the last three quarters of the year taking the brunt of the weakness, down an average of 36¢.
Cheese futures weathered the Class III storm, with only 2Q 2015 showing significant weakness, closing 3.3¢ lower, at $1.6080/lb.
Whey prices sustained another shellacking, with futures settling lower across the board. World protein prices continue to erode, and whey is no exception. Export prospects are lackluster, and there has been talk of export orders being cancelled.
Spot butter plummeted 23¢, to $1.61/lb. 1Q 2015 butter futures were hit hard, while deferred contracts treaded water. Oceania fat prices on the GDT auction were firm. Domestic butter prices are still not competitive on the world markets. Relative to the rest of the domestic dairy complex butter, has more room to correct to achieve parity with world prices.
Nonfat dry milk was offered down again, and weakness was spread across the futures board. Class IV also took a punch, settling 16¢ to 72¢ lower. Domestic end users are finishing up inking their annual supply contracts. Some buyers are choosing to leave a portion of their needs open, and are confident they can secure product on the spot market at lower prices.
Dec. 16 spot session results:
Block cheese: $1.6075 (up 0.25¢)
Barrel cheese: $1.5775 (unchanged)
Grade A NFDM: $1.0050 (down 5.5¢)
Butter: $1.6100 (down 23.0¢)
Today’s expectations:
• Class III, Dry Whey & Cheese futures to open lower
• Class IV, Butter & NFDM futures to open lower
Grain futures
Grain markets are a tale of two cities. Wheat continues to grind higher on Russia fears, while corn and soybeans continue lower.
Many believe corn continues to defy gravity as it stubbornly stays above $4/bushel. Multiple sources indicate China is will announce approval of MIR162 GMO corn and DDG imports while their trade delegation visits Chicago. There are rumors that they have already purchased both for import. Soybeans continued lower, as favorable South American weather continues to bolster the idea of record yields. Today’s expectation:
• Corn, Soybean & Soybean Meal futures to open firm
The trading of derivatives such as futures, options, and swaps may not be suitable for all investors. Derivatives trading involves substantial risk of loss, and you should fully understand those risks prior to trading. Any reference to past performance is not indicative of future results. All references to futures/options trading are made solely on behalf of FCStone, LLC. All references to swap execution and bi-lateral swaps are made solely on behalf of INTL Hanley, LLC. FCStone, LLC will clear swaps when applicable. Swaps are only available to eligible counterparties. All observations of economic, political and/or market conditions are not intended to refer to any particular trading strategy, promotional element or quality of service provided by INTL FCStone Inc. and its subsidiaries and should be construed as market commentary. All recommendations to buy or sell a specific derivative or forecasting statements regarding market activity and the pricing thereof should be construed as a solicitation in any jurisdiction in where such an offer or solicitation would be legal. Proper context and guidance including but not limited to the particular trading objectives, financial situations and the needs of the intended audience were taken into consideration when this recommendation was prepared. Contact your account representative for specific advice to meet your specific trading preferences or goals. These materials represent the opinions and viewpoints of the author, and do not necessarily reflect the viewpoints and trading strategies employed by INTL FCStone Inc. and its subsidiaries. Sources of information believed to reliable were used in preparing such observations, and no guarantee or representation regarding the accuracy of those sources has been made. INTL FCStone Inc. and its subsidiaries are not responsible for any redistribution of this material by third parties, or any trading decisions taken by persons not intended to view this material.