Editor’s note: This market commentary is provided by the Dairy Division at FCStone/Downes-O'Neill in Chicago, Ill.

Continued pressure on the spot markets yesterday was the big story as the block dropped 4.25 cents on seven trades. The weekly total of 17 has already matched last week’s volume, which we have noted was the largest since the final week of April. Though buying continues to enter the market, the aggressiveness of the selling was enough to push futures lower yesterday as prices closed steady to 10 lower throughout the complex. Volume was fairly light as we traded just 759 times yesterday as the market dipped.  It seems of late you could walk away from the market after 11:30 and come back later and little to nothing would be changed.

USDA FAS reported exports yesterday at 289 million pounds in total for the month of May — on par with the April export volume, while cheese was at 43.0 million pounds, up 2% from the April release. Cooperatives Working Together also accepted bids for 648k lbs. of cheese last week. 

In the grain markets, it was a relatively bullish USDA report yesterday morning as new crop carryout was 130 million bushels below the trade estimates, thanks largely to increased usage from exports, ethanol and feed/seed residual. We note that this was the first time in history the USDA posted ethanol usage above that of feed usage for corn.

At the end of the day, corn was up 25.25 cents in December — also in part due to the fear of very high temperatures coming to the Corn Belt over the next two to three weeks. Settlement on December corn was 658, and technically while we wouldn’t refer to the situation as healthy some major resistance levels were broken on the rally. Beans followed corn after a ho-hum report, closing up 11.25 cents at 1358.25.

Reports out of South America estimate their soy acreage will be up ~3% this coming year, but they expect a lower total production number as yield seems unlikely to repeat after a near-perfect weather pattern last season.

We look for corn to open mixed and soybeans to open 3 to 5 cents higher.

Daily CME spot market prices:

Block cheese: $2.055 (down 4.25 cents)

Barrel cheese: $2.1025 (unchanged)

Butter: $2.03 (unchanged)  

Grade A NFDM: $1.625 (unchanged)     

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