Morning Dairy Comments, 03/29/2016

Tuesday, March 29, 2016

General Market News

· Egypt air plane hijacked, 7 people remain trapped

· FBI has unlocked San Bernardino terrorist IPhone 

· U.S. Capital Center shooter, Larry Dawson, arrested and in stable but critical condition

· Janet Yellen to speak in NY today, inflation being the key buzz word to listen for



A Dairy Fast-Break   

A mixed and quite finish to the dairy futures market Monday confirmed that would be hedgers and speculators were overcome by the ample amounts of lamb shaped butter, cheesy potatoes,  and cream pies on Easter Sunday and were unable to participate in yesterday’s trade. If that is the case, maybe such a binge put a dent in the cold storage inventories. There was no definitive price direction coming out of the Class III futures contracts yesterday, volume was at 710 contracts, 300 contracts below the average from 2016.   A lower block and barrel spot session didn’t even wake Class III from its Easter slumber. Blocks were down 1 cent to $1.48/lb and barrels were down ¾ cent to $1.4425/lb. Nothing earth scattering here as spot cheese is still within its 3 month long trading range. We saw this stagnation in price during the same timeframe last year, however the range was 10 cents higher than today’s prices between $1.40/lb and $1.50/lb.  It wasn’t until May of last year before volatility was injected into the market place and prices moved higher. Which makes sense with Memorial Day and the official start to grilling season coming at the end of May.  If history is any indication, ceteris paribus (with other things the same), the next opportunity for prices to move higher could come in May/June. Cheese futures finished mixed yesterday on low volume, but the volume was more evenly distributed; whereas 79% of the class III volume was in the front 4 months.

A spring snow storm rocked Colorado last Thursday and Friday, with accumulation ranging from 12-24 inches in less than 24 hours, breaking a previous record. There was reports of delays in milk pickups as well as difficulties in milking cows. We do not know yet how big of an impact this will have on production. The biggest concern however may not be milk production rather heifer lose as NW CO is a common heifer growing region for dairymen countrywide.  

NFDM went unchanged during the spot session yesterday, but there was 1 bid and 2 offers left unfilled, hinting that there is at least one ready buyer in the market place if prices go lower. This comes as no surprise as spot is trading at a 4 cent discount to April Futures. With a lack of follow through on recent weakness in both spot and futures, NFDM seems poised to have bounce here this week that has been constrained by EU intervention fears.  NZX futures point towards a higher SMP and WMP price in the next GDT auction on April 5th. A bump in GDT could help bring life to the NFDM futures contract which settled mixed on a volume of 25 contracts yesterday. The average volume for NFDM futures the day before a GDT Auction during 2016 is 29 contracts, so yesterday’s trade is par for the course.

Cash butter went unchanged on spot, with no trades and only 1 bid. Futures were unchanged in a lackadaisical trade of just 15 contracts. Buyers seem confident in current inventory levels, and their availability to purchase butter, which can become bearish in a hurry. The mild winter and early spring brought with it higher component levels, making cream more readily available. Butter should feel some pressure, as there is no additional demand insight, but consistent to growing supplies. However the butter market has acted anything but rational for and extended time and if it doesn’t pick up some downside momentum in the next 30-50 days it might be off to the bullish races once again. 

We expect all dairy products to have a soft opening this morning 

Spot Session Results











DOWN 1  







Down ¾ 



















It’s estimated that the funds net position on soybeans did not change on Monday. Soybeans did however experience some weakness, settling slightly lower. A recent rally in prices, may have spruced some farmer selling, at levels not yet seen this year, until now. Weekly export inspections for beans were on the high side of trade estimates, coming in at 567.5 thousand MT, but below the 10 week average of 1099.7 thousand MT. Brazil’s exports came in strong at 1883 thousand MT, a decrease from last week.

Corn found some traction yesterday settling in the green on the hands of better than expected export inspections report. The high range of the trade estimate was 950 thousand MT,  the actually was at 977.7 MT; above the 10 week average of 790.3. Exports are still behind, and hard pressed to meet USDA expectation for this year. Exports out of Brazil for last week were at 66 thousand MT, down significantly from previous week, and far from the 880 thousand 10 week average.  Funds were buyers of corn on Monday, but still are thought to have a net short position of 160,659 contracts. Prospective Planting numbers come out on Thursday at 11 am CST.

We look for a firm opening in the grain complex today. 

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.

Market Intelligence Free Trial

Meet the Team

Kansas City, MO
1251 NW Briarcliff Parkway
Suite 800
Kansas City, MO 64116
Tel:+1 (816) 410-5079



Our privacy policy has changed. View our privacy policy to learn more.