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

The Class III futures finished the week with mixed prices as the Nov12 through July13 contracts settled between 7 cents lower and 7 higher with the Oct13 through Dec13 closing out between 2 lower and 5 higher. All other contracts settled unchanged. The Jan13–Mar13 futures pack finished unchanged for the day, though lost a total of 40 cents week over week to end at a price of $18.45. Price volatility was limited, in part, due to a subdued spot cheese session and uncertainty ahead of today’s milk production report.   

Class I demand is currently very strong in the Northeast and Mid-Atlantic regions, limiting manufacturers’ supplies. Milk production in the in the Southeast U.S. is increasing, while is uneven in the Central region. California milk production remains steady with marginal increases, while in the Pacific Northwest production is at or near seasonal lows.

The grain markets ended the week with mixed results with corn moving higher, while the wheat and soybean contracts posted losses on the day. The Dec12 corn contract gained 5 ¾ cents to close out at $7.27 while dropping 11 ¾ cents lower week over week. The soybean complex was the biggest loser Friday after the news the China had canceled orders for a total of 600k metric tons of U.S. soybeans for delivery in December and January. The Jan13 soybean contract fell by 18 ½ cents to $13.83 ¼ cents, shedding 68 cents throughout the week. Demand concerns throughout the grain complex have led to the price declines of late. Highlighting one of the demand issues, cattle feedlot placements for the month of October totaled 2.18 million head, 13% lower than during October of last year and was the lowest level for the month of October since reporting began in 1996. 

We look for corn to open 4 to 8 cents higher and beans to open 12 to 16 higher.

Block cheese: $1.825 (up 0.5 cent)

Barrel cheese $1.7225 (unchanged)

Butter: $1.795 (down 7 cents) 

Grade A NFDM: $1.565 (down 0.75 cent)

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