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

Class III futures traded moderately higher Thursday as November and December paid homage to a 0.75-cent uptick in the price of block cheese and trudged higher. 

With blocks closing at $1.8675, November rallied 13 cents intraday to print $18.70 ― the highest level since April 23. But it was December led the way for price gains, finishing up 17 cents to $17.88. Contracts for 2014 finished mixed, slightly higher as commercial buy side interest remains robust at or around the $16.90 to $17.00 price average from January to December. The “wait-and-see” method of buying for Q4 ― inspired by borderline burdensome cheese inventories ― has not panned out, and we think there is some level of capitulation to that effect responsible for this week’s price strength.  

Spot session results:

Block cheese: $1.865 (up 0.75 cent)

Barrel cheese: $1.80 (unchanged)

Grade A NFDM:  $1.8675 (up 0.75 cent)

Butter: $1.475 (unchanged)

Grain markets continued to chop in quiet fashion Thursday, resulting in modest gains for soybeans and modest losses for corn. Markets are choppy and largely sideways. Market bears continue to focus on the harvest yield discussions, which are now expected to be over 160/bu. per acre for corn and over 43/bu. per acre for soybeans in some camps. Also, cold weather this week has helped dry down some of the corn crop for an added benefit during the harvest. 

Market bulls ― if you can find them ― rely on discussions of Chinese demand and export potential in general, along with an uncertain outcome of South America’s growing season.  Export sales were materially better than expected for corn, but as good ― or worse ― than expected for soybeans and bean meal. 

We remain on guard for a corn market rally as market bears far outweigh the bulls ― even short-term ― right now. Beans also look poised to rally, but November option expiration may limit any would-be gains for today. (Nov beans seem pinned to the $13.00/bu mark until options are off the board.)  Longer-term, we remain largely bearish of both of these markets, but they rarely make it easy on you.

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