Milk Prices ?Moove? Higher
Today’s Spotlight Market
In addition to the rally seen in Milk prices of late, other major members of the daily futures complex, Butter and Cheese futures, also have seen rather dramatic price moves. July Cheese futures (CSC1) are displaying a very similar chart pattern to the July Milk futures (DA). For Cheese, we saw prices accelerate to the upside once resistance at 1.474 failed to hold.? The July Butter chart actually looks stronger than both the Milk and Cheese charts, as the 2016 lows were made back in March, as opposed to May for Milk and Cheese futures. July Butter (CB) prices also have held near the 2016 highs, and it appears that 245.00 is now the next major upside resistance level.
Fundamentals
For those traders that believe that commodity markets trade in predicable cycles, the Class lll Milk futures market should be on their radar screens. Following a nearly 5-year bullish trend that began in early 2009 and ended in late 2014, Milk prices moved up nearly threefold to peak at an astounding $24.60 per cwt. in December 2014. Since that time, Milk prices have fallen nearly in half to $12.71 earlier this year. However, the bearish trend appears to have ended in early June, as prices have rallied sharply since the start of June, with the lead month July futures rallying nearly $3 cwt. the past two weeks. So what is behind the recent up move? Analysts who follow the daily markets cite higher feed prices, especially Corn prices, as a potential catalyst on top of the recent USDA World Agriculture Stock Estimate (WASDE) report in which the USDA raised its forecast for Milk prices by an average of 30 cents per cwt. However, not all of the fundamentals for Milk are bullish, as we still have relatively large dairy product inventories globally, and the outlook for U.S. dairy exports remains lackluster. In addition, the USDA still expects U.S. Milk production to increase going into 2017, despite what could be difficult profit margins for producers if feed prices continue to outpace recent gains in Milk prices.?? ?
——————————————————————————————————————–
optionsXpress, Inc. makes no recommendations on investments and does not provide financial, tax or legal advice. Content and tools are provided for educational and informational purposes only. Online trading has inherent risks due to system response and access times may vary due to market conditions, system performance and other factors. An investor should understand these and additional risks before trading. Options and Futures involve substantial risk and are not suitable for all investors.
?