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CME: Gap Between Milk & Corn Futures Narrowing

06 December 2011

US - Spot butter trading activity remains heavy: 12 loads traded yesterday, the first six on offers and the last six on bids, writes Alan Levitt.

By the closing bell, buyers pushed the price up a quarter cent to $1.6325. Three weeks ahead of Christmas, most end-of-year butter orders have been shipped.

Domestic butter sales have been very good this year. Exports were strong in the first half of the year but have tailed off since then. Meanwhile, record butter prices in 2012 (the full-year NASS survey average will come in around $1.95) have spurred butter production.

In the first 10 months of the year, output was up 16.8 per cent from a year ago (see chart), with large gains in both the Western and Central parts of the country.

Butter futures posted small gains in the front months today. Contracts covering the first half of 2012 average $1.6683.

Sellers offered cheese prices lower, though barrel buyers stepped in to support the market in the upper $1.60s.

Milk futures were slightly higher, particularly in the front months.

FEB-JUN12 contracts hit new highs. The first-half Class III futures average is $17.21, up nearly a dollar in the last six weeks. MAR12 corn futures slipped to $5.91/bushel yesterday, down almost $2 from the contract high reached in late August.

USDA’s “World Agricultural Supply & Demand Estimates” report, with updated production and use forecasts, comes out Friday.

Further Reading

- You can view the full report by clicking here.


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