Editor’s note: This market commentary is provided by the Dairy Division at FCStone in Chicago, Ill.

The mid-week pop to the upside marked the third consecutive higher close for the Class III market. Steady upticks in the cash cheese market have worked to keep prices buoyant above $2.00/lb. in an effort to correct the great chasm that existed in the block-barrel spread just over a week ago. The spread has been narrowed back to within 5¢. With spot prices roaming to the upside and bids left on the table, it’s becoming apparent that holiday buyers have yet to fill their needs. Cheese futures responded by trading lockstep with Class III, which resulted in widespread closes in the green through 2015.

From a technical perspective, the upturn in both Class III and cheese futures has served to provide an opportunity to initiate protection, or add to existing levels.

Dry whey finished mixed, as nearby contracts continue to trade in the upper bands of their recent range. The persistent strength has served to rally deferred contracts.  

 An 8¢ hike in the price of spot butter – demonstrating that seasonal buying has yet to exhaust itself – worked to boost futures prices through mid-2015. Despite support from the butter market, Class IV futures continued lower. The 1H 2015 average settled down 9¢, at $16.47/cwt. The NFDM market has a weak tone.

 

Oct. 29 spot session results:

Block cheese: $2.1150 (up 1.5¢)

Barrel cheese: $2.0650 (up 5.5¢)

Grade A NFDM: $1.2400 (unchanged)

Butter: $1.8500 (up 8.0¢)

 

Today's expectations:

• Class III futures to open steady to lower

• Cheese & Dry Whey futures to open mixed

• Class IV & NFDM futures to open lower

• Butter futures to open steady to higher

 

Grain futures 

Soymeal pulled a repeat performance, putting in a fresh high on the back of strong demand, continued short covering, fund buying and logistical issues. Spillover strength prompted soybeans into full-blown upside call buying panic mode, as volatility and volume exploded. Contagion spread through the corn and wheat markets, with corn tacking on a dime and wheat picking up 7.5¢.

While the grain markets have shown some impressive strength of late, one has to wonder how much gas is left in the tank, as open interest has decreased on the moves higher and the magnitude of the harvest in full swing.

Export sales were scheduled for release this morning.  

 

Today’s expectation:

• Corn futures to open higher

• Soybeans and soybean meal to open higher

 

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