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

Yesterday continued the bottoming formation in cheese prices and futures for Class III and cheese and whey, as well. Perhaps the biggest supporting factor was the increase in GDT cheese.  For some time, we have been talking about the great spread trade opportunities and they are starting to come to fruition as the contraction of them is coming into play.

Volume remained low for Class III, but fell off for the other products, as well, in line with a shortened holiday trading week flooded with reports in a shortened time span. We look for bottoming to continue, but little upside potential for U.S. cheese in the medium term.

While Class III and cheese futures open interest have increased on both up days, we note that yesterday put volume and put OI increased, while call volume declined and call OI declined. This is the only technical factor not overly supportive bullishly at the moment.

The markets will be open today, closed tomorrow (Thanksgiving Thursday) and open until noon on Friday.

Corn right now has really turned on little news other than fear of exports being disrupted out of the Gulf due to low water levels. We think the red line at 765 should provide solid resistance late this week or early next; a bounce above that, however, may push us back toward the 8.00 mark.

We look for the grain complex to open mixed on light volume.

Block cheese: $1.825 (unchanged)

Barrel cheese $1.725 (up 0.25 cent)

Butter: $1.70 (down 2 cents) 

Grade A NFDM: $1.5625 (unchanged)

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