CME: Milk Ends the Day Lower – Grains Higher

US - Most dairy product futures closed lower today under mounting selling pressure, writes Alan Levitt.
calendar icon 24 February 2012
clock icon 1 minute read

This morning’s release of the Dairy Market News’ weekly surveyed dry powder prices, showed further declines in the average values for both nonfat dry milk and sweet whey powder from the prior week.

Adding to the bearish sentiment, CME cash cheese traded lower again today. Blocks closed at $1.4675/lb. and barrels at $1.4700/lb., a decline of 1.25¢ and 0.50¢, respectively from yesterday. The combination of a lower cash cheese trading session and the dry product prices report resulted in double-digit declines in Class III futures. For a shorttime the APR 2012 Class III contract traded as low as $14.84, before closing near $15.00.

For every penny change in the dry whey price, the Class III price decreases by 6¢. As a result, the 4.0¢/lb. drop in the dry whey price is pushing the Class III futures lower by 26¢ in some months.

While dairy futures moved lower, first half 2012 grains markets showed slight gains on the day. Comparing the performance of MAR 2012 Class III futures to that of MAR 2012 Corn since January, it shows the change in market sentiment between the milk price and the corn price. This will be important to watch as we move into spring with corn being a major input cost at the farm level.

TheCattleSite News Desk

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