Markets:
AM price moves: USD +0.120 @ 81.500, Euro -9 @ 1.2727, Crude -1.29 @ 92.69, Copper -0.0500 @ 3.4720, Gold -20.6 @ 1,536.5, Dow futures +10 @ 12,605, S&P +4.40 @ 1,332.60, NZ Dollar -31 @ 0.7651, Yen -30 @ 1.2429, Canadian -36 @ 0.9911
General:
- Crude oil futures continue to plummet along with most ‘things’ as the USD remains strong amid EU concerns
- Greece continues to dominate the headlines and trigger a stronger USD and weaker stocks in the EU, this time the country is at an impasse on a governing coalition. A problem which could delay international aid and has increased fears of Greece exiting the EU
- The Bank of England increased their inflation outlook, targeting an increase above 2% over the next year which is higher than expected a few months ago
- A bit of good news as UK unemployment benefit claims fell 13,700 to 1.59 million the largest drop in nearly 2 years; unemployment came in at 8.2% a slight decline from the previous 8.4%
- Today’s reports and the week ahead at a glimpse:
http://www.cmegroup.com/daily_bulletin/Section04_Agricultural_Soft_AltInvestment_Futures_2012094.pdf
5/15 Class III Futures: Volume: 758 Open Interest (OI) Change: +50 Total OI: 26,605
5/15 Class III Options: Est. Put Volume: 186 Total OI: 34,391 Est. Call Volume: 117 Total OI: 31,573
5/15 Other Dairy Futures Volume: Butter: 93 Dry Whey: 49 NFDM: 6 Class IV: 28 Cheese: 206
5/15 Individual Class III Futures Prices, Change, Volume & Open Interest
May 12 $15.25 UP 1 Vol: 88 OI Change: DOWN 27
June 12 $14.87 UP 17 Vol: 357 OI Change: UP 28
July 12 $14.73 UP 6 Vol: 183 OI Change: UP 23
Aug 12 $15.12 DOWN 1 Vol: 43 OI Change: UP 11
May to July Class III Avg. $14.95 UP $0.08
May to July Class IV Avg. $13.62 UP $0.13
Dairy: Class III and Cheese
Spot Markets:
Class III futures were nearly silent over managing just a handful of trades leading into the day session. 758 contracts managed to trade in a missed session that saw only the August contract settle with a loss, dropping just a penny. The remainder of the 2012 contracts settled between one and 17 cents higher with June the big winner.
The trading volume tapered off significantly past the August contract, as the market was content to remain within yesterday’s trading range for most of the monthly contracts. The spot cheese session did little to sway traders as both the blocks and barrels closed out the day unchanged with just a single trade posting in the barrels. The cheese futures traded in much the same fashion, failing to post any big moves either direction. The cheese market finished mixed with settlement prices ranging from down ½ cent in September to up 1.6 cents in June. Could this be the calm before a storm? Only time will tell, but these markets look poised for a breakout move in the coming days.
While Class III was nearly unanimously higher cash cheese futures were mixed with nearby months June, +0.016 and July +0.010 while deferred contracts were almost all lower. Only Nov closed higher by 0.001 and other months from August through February were -0.002 to -0.005 on solid volume of 206 contracts. Class IV saw a large bounce with May through September up 12 to 19 cents and Q2 of 2013 up by 6 to 13 cents with volume at 28 total trades.
Overnight Class III futures were 3 to 9 higher on slow volume of just 10 total trades by 6:30 Chicago time.
We look for Class III futures to open mixed.
Results of the GDT auction:
Prices below reflect the value across all contracts:
· Anhydrous Milk Fat (AMF) average price: $2,499 /MT ($1.1335/lb.) ($0.9086 /lb., adjusted to 80% butterfat equivalent)
· Butter Milk Powder (BMP) average price: No Product was offered
· Cheddar average price: $2,857/MT ($1.2959/lb.)
· Milk Protein Concentrate 70 average price: $3,940 /MT ($1.7872 /lb.)
· Rennet Casein average price: $6,244 /MT ($2.8323 /lb.)
· Skim Milk Powder average price: $2,573/MT ($1.1671/lb.)
· Whole Milk Powder average price: $2,546/MT ($1.1549/lb.)
NFDM, SMP, WMP:
Not much action again in the NFDM market as only 6 contracts managed to trade on the day. Of the four contract months able to show some life, prices all fell lower. Price drops ranged from .500 cents in June to down 2.5 cents in November. The results of the GDT auction reflected the sentiment that we have held for quite some time that the NFDM market is inherently bearish, with further declines expected in its future. The skim milk powder GDT price fell 7.12 cents from May 1st auction, while the WMP price dropped 10.43 cents. While GDT was unsupportive the CWAP numbers were flat out bearish. The weekly price came in at $1.1574 a massive 9.57 cent decline (-7.6%) week over week. Total volume was back above the 20 million pound mark as well at 20.5. That pricing announcement trigged heavy volume overnight as 25 total trades have occurred by this morning and prices are steady to 2.00 cents lower from May through September.
We look for NFDM to open lower.
Butter:
The spot butter market continues to defy logic by posting yet another gain, this time in the amount of 1.25 cents, to settle at $1.3525. The spot session triggered reactive buying that pushed the futures between .750 cents to 2.5 cents higher throughout all of the 2012 contracts on 93 total trades. Much like with the NFDM market, fundamentally, one would tend to believe that all the excess milk production of late would have been driven towards the more storable products, such as butter, thereby increasing the available supply and pushing prices lower but sellers on the CME spot market seem to be very willing to let the price move higher while they can. That should be coming to an end soon as the GDT auction tells the story. The AMF average price lost 11.9% across all contracts from the previous auction while, when adjusted for an 80% butterfat equivalency, posted a loss of 12.84 cents and falling sharply below $1.00. We still believe that the current rally is nothing more than an ideal opportunity for market shorts as prices should resume their downward tract in the coming weeks.
We look for butter to open mixed.
Dry Whey:
We look for dry whey to be mixed.
Grains:
A hectic day for the grains markets as the entire complex came into the day posting higher pricing established in the overnight session on concerns of a dry forecast for the U.S. Once the market opened for the day session, the grains gave back much of the overnight gains, with corn actually turning negative, if but only for a moment. The July corn closed out the day up 14 ¼ cents at $5.97 ¼, triggered by technical buying interest and strong feed demand. The July beans jumped 26 cents higher to settle at $14.13, paving the way for the surge higher in the grain complex. The July wheat closed 10 ½ cents higher at $6.08 ½. Traders will be keeping close watch on the weather forecasts over the next couple weeks as continued, above normal temperatures will cover much of the U.S.
We look for corn to open 2 to 5 lower, soybeans to open 12 to 17 lower, meal to be down 3 to 5 and wheat to open steady to 3 lower.
Robert Chesler