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

We finally welcomed summer with open arms as temperature gauges posted highs in the 80s across much of the Midwest on Memorial Day. The holiday heat was in stark contrast to the mid-60 degree weather and flash-flooding rainstorms endured on Saturday and Sunday (1 to 2.5 inches from Southeast Iowa to Northeast Illinois). Summer weather is under way and that is positive for crop farmers here.

Class III finished out the last full week in May in a mostly firm fashion on a moderate 1,283 contracts trading hands. Though prices had begun to sell-off some by mid-day Friday, buy interest re-emerged late in the day to bolster prices back into positive territory ahead of the long holiday weekend.

The CME spot cheese again gained ground on Friday. Block and barrels pricing remains inverted to a slightly higher barrel price of $1.8175 barrel vs. $1.81 block. We expect cheese buyers to be back in for more today, but remain wary of how long the sellers will stay away. According to our cheese market pricing history, there were four years since 1980 when prices rallied in the months of May and June — 1998, 1999, 2007 and 2008. Those May cheese rallies largely ended in early to mid-June. Perhaps this year will be different, but don’t count on it unless demand has dramatically shifted from somewhat quiet to the aggressive appetite of the first quarter. With anecdotal export talk more mixed than strong, and with poor U.S. gross domestic product (GDP) numbers released last week, the jury is still out on that.

Cash-settled cheese futures finished steady to .01 cent higher on Friday, but trading remained quiet. We expect volume in cheese futures to pick up as we enter June.

The overnight Class III session was active following the long weekend. Prices were steady to 12 higher on a total of 76 contracts just after 10 p.m. Chicago time.

We look for Class III to open mixed to firm.

Corn finished the week on a firm note with December corn futures setting a new high and closing at 684, right in line with the old closing highs. July corn finished the week 13 cents higher at 758.5; soybeans down 5 at 1379.75, and wheat up 5.25 at 819.75. Despite the strength, and with the weather improvement over the weekend, it now seems likely that our next move may be to the downside unless we can confirm a break above the old highs in short order.

We look for corn to open mixed for old crop and 3 to 4 cents lower for new crop, and beans and meal to open mixed.

Daily CME spot market prices:

Block cheese: $1.81 (up 2.25 cents)

Barrel cheese: $1.8175 (up 2.75 cents)

Butter: $2.18 (unchanged)  

Grade A NFDM: $1.64 (unchanged)

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Source:  FCStone/Downes-O'Neill