A previous article I wrote on March 20th entitled, “Do Price Patterns Indicate Future Movement”, I pointed out price patterns for block cheese over the past two years and how price rallies were followed by steep declines. Well, the movement of the past three weeks certainly supports that they do. The block cheese price has fallen eliminating the price gain in March and then some moving back to the lowest level it has been since September 6, 2022. This begs the question over whether price will rebound quickly and significantly similar to previous patterns. There is certainly a potential for this, but the unfolding of that strength is anyone’s guess.
Volatility has increased substantially since 2020 with much of it seemly driven by trader psychology rather than solid fundamentals. This has been very evident in the cash markets over the past two years. Buyers in the cash market will hold back purchasing on an as needed basis until the price begins to move higher. This brings more buyers into the spot market in the attempt to purchase product before the price moves much higher. Buyers then try to outbid each other causing a leapfrog effect which drives the market significantly higher at times and unsupported by fundamentals. The same is true when prices weaken as sellers want to move product before the price moves much lower.
By ROBIN SCHMAHL
April 17, 2023
dairyherd.com
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