Morning Dairy Comments, 03/24/2016

Thursday, March 24, 2016

General Market News

· Dollar rise hits commodities as Fed talks of tightening

· China promises tax cuts for businesses to spur economy

· Dubai dairy Al Rawabi to expand with $100 million farm in Liwa Region

· How McDonald’s and Pizza Hut hope to win back India



Class III, Cheese & Dry Whey

The class III market seems to have become very indecisive of late and yesterday’s session was just that, as prices traded both sides of unchanged and ultimately mixed from -5 to +5 from March all the way through November of 2017. Volume was near 700 contracts on the day. The spot session seems to be cooling after the recent run up but the question remains which direction will the next price movement take this market? Thus far the charts still look slightly bullish in the short term with RSI above 50 and futures still above the 10 and 20 day MA’s. With a long weekend ahead the market may not test support in May at 13.53 and 13.50 today but they will be key points to keep an eye on for today and early next week.


Cheese futures finished the day steady to -0.008 lower on volume of over 400 trades. Weekly NDPSR pricing remains firm with blocks virtually unchanged at $1.5024 while barrels were higher by 0.66 cents to $1.5041. Whey pricing was relatively quiet yesterday with most months steady but a few contracts settling higher led by December which was up a penny. Only 20 trades took place on the day however today’s session may be a bit more active as NDPSR showed a bit of a surprising decline coming in at 24.50 cents a 1.14 cent declines from the previous week. An eye will be kept on weekly DMN prices to see if this pattern may continue though we remain neutral to slightly bullish on dry whey futures.

We look for Class III, Cheese and Dry Whey to open lower.

Spot Session Results
































DOWN 3 ¾ 




NFDM & Butter

The class IV market continued to be under sizeable pressure yesterday as both butter and NFDM saw significant losses. The butter market suffered the largest losses, settling down 1.25 to 4.925 cents from April through January of 2017. Trading continues to be very active as nearly 300 trades took place. The spot butter market, as anticipated on the heels of the cold storage report, saw sellers be more aggressive but buyers were there to pick up loads as the price fell. Six total trades took place as the price fell by 3.75 cents to $1.92 setting a new low for the recent move. This is a pattern we’d expect to see continue in the coming weeks as buyers continue to pick up loads as the market moves to fresh lows. Weekly NDPSR pricing came out at $1.9940 down 0.64 cents from the prior week.

NFDM pricing was also lower on the day with massive volume traded. Over 600 contracts traded with futures   -0.425 to -1.225 from March through December at settlement. With such large volume it is interesting to note that open interest increased by just 23 contracts on the day. Futures are very near their previous lows and perhaps that’s what triggered the significant buy side interest on the price declines. It’s tough not to see more downside as a possibility with pressure on the spot market and weakness in the CWAP price yesterday. Weekly NDPSR pricing was 74.30 cents down 1.89 cents with volume over 26 million pounds well above the 5 week average. Stabilization in international pricing has occurred and it seems as though the market may be looking for something similar to occur domestically near previous lows.

We look for Butter and NFDM to open lower and Class IV to open steady.



It was a very mundane session for the grains during the trading day yesterday as prices were lower overnight and held those levels for about 98% of the day session. While a correction should be welcomed by the market bulls from overbought levels MOC buyers stepped up in force to bring the market off of its intraday lows. Settlements were down 1.50 cents for corn at $3.6850, -5.0 cents for soybeans at $9.0525 and down 3.75 cents for wheat at $4.6300. We’re drawing nearer the March 31st planting intentions report and a little pullback seems warranted given that we’ve moved higher in nearly every trading session this month. With a long weekend ahead it will be interesting to see if/how traders look to reposition themselves before the report and the end of month. Export sales are due out later this morning.

We look for Corn to open 1-3 cents lower, Soybeans to open 3-5 lower and Wheat to open 1-3 cents lower.


Unless otherwise noted, the posts on this blog should be construed as market commentary, merely observing economic, political and/or market conditions, and not intended to refer to any particular trading strategy, promotional element or quality of service provided by INTL FCStone Inc. or its subsidiaries. INTL FCStone Inc. is not responsible for any trading decisions taken by persons viewing this material. Information contained herein was obtained from sources believed to be reliable, but is not guaranteed as to its accuracy. 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. or its subsidiaries. Reproduction without authorization is prohibited. All rights reserved.

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