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

Class III futures turned higher Thursday in response to an uptick in spot cheese. Block cheese finished up on the day for the time since Nov. 1, while barrel cheese held steady after trading between .75 lower and .25 higher. Dry whey futures also firmed through April, lending a supportive hand to the Class III trade where contracts through the end of 2014 settled anywhere from unchanged to + 10 on the day. 

Market sentiment is largely mixed with market bears citing softer cheese sales this week outside of what appears to be some lingering holiday deals acquired during the spot session yesterday. Conversely, market bulls lean on a more favorable U.S. cheese pricing environment when compared with the rest of the world and the continued discount of Class III milk to Class IV. 

Currently, the January to December Class III average is holding just above the $17.00 price level at $17.03, which is $1.48 below the current $18.50 average of Class IV. Last year at this time, the 2013 January to December pack average was $18.38 - $0.08/cwt above the then $18.30 Class IV pack average. 

Spot session results:

Block cheese: $1.815 (up 1.25 cent)

Barrel cheese: $1.76 (unchanged)

Grade A NFDM:  $1.975 (up 1.5 cent)

Butter: $1.65 (up 4.5 cents)

Corn prices moved a bit lower yesterday as traders ponder the long-term fundamentals.  Producers seem to be committed to holding inventories into the new calendar year. Ethanol production for the week is at 927,000 barrels vs. 902,000 last week. Informa is set to estimate 2014 plantings in a mid-February report. 

Corn futures in December settled down 3 ¼ cents to 426 ½.  Jan. beans settled down 1 ½ cents in a choppy session.

Traders are looking for another strong week of export sales in Friday’s delayed report. USDA announced 40,000 tons of soyoil sold to China; however, total U.S. soyoil sales are only at 48 percent of last year’s. The market remains torn between tight old crop fundamentals and the prospect of record supplies in South America by spring.  Keep in mind, we normally see prices rally on into January/February, depending on weather conditions in South America. The summer growing season in Brazil and Argentina is January and February.

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