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

It was an extremely active day for the Class III futures market that got started with very sizeable gains of 10 to 30 cents on heavy volume overnight. Futures stayed strong throughout the morning, rallying to new highs. The spot session did little to change the market direction as some months traded as much as 40 higher; however, just after the noon hour some selling pressure started to develop and by settlement time futures were well off their intraday highs. May finished 4 cents lower on the day after trading up to 31 higher; June settled up 25 cents, but was 17 cents off its high. Other 2013 contracts finished the day 6 to 16 cents stronger as volume was very strong ― just over 2,700 contracts. Given the size of the gains the past few sessions, the late day action was likely a fair amount of profit-taking coming into the market ahead of the NDPSR release. 

Spot session results:

Block cheese: $1.6925 (unchanged)

Barrel cheese $1.6425 (up 3 cents)

Grade A NFDM: $1.65 (up 1 cent)

Butter: $1.65 (up 1.75 cent)

Grains traded to a mixed close yesterday with upside pressure on the wheat market, while the soybean market saw downside pressure. The mixed wheat and soybean markets left corn mostly unchanged on the day with May finishing just a penny higher at 641.50. Pressure on the soybean market was a result of worry over Chinese demand in the coming months as meat demand is softening due to livestock health issues and that is keeping pressure on margins as well. Wheat, however, was moving higher on just the opposite news with reports of large Chinese purchases as prices have become more attractive of late. As the spring planting season gets under way, the market has a tendency to start to chop sideways ― we’d expect that to be the case, but we must be on the lookout for potential planting delays which would likely kick-start a moderate rally. 

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