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

Most everything was pointing to another sharp sell-off for Class III futures with weakness early in the session prior to the spot market, and then the spot market closing down by a penny for blocks and 1.75 cents for barrels. However, the market seemed to resist further weakness as we are extremely oversold technically. After prices traded to double-digit losses during the spot session ― and at one point August was down 19 cents ― futures started to recover and climb back toward unchanged into the close. At settlement, most months were still lower but November, down 5, was the largest loss on the board. Oct was the only 2013 contract that managed to close higher, by 3 cents, while 2014 contracts were steady to +7 cents.

With a sharp cost of carry, there may be an opportunity for spot market participants to buy cheese and sell futures once again, which could bring in some support for the spot market through the end of the week.

Spot Session Results

Block cheese: $1.6775 (down 1 cent)

Barrel cheese: $1.64 (down 1.75 cent)

Grade A NFDM:  $1.73 (unchanged)

Butter: $1.4275 (down 4 cents)

In the grain complex, today is the last full session ahead of the USDA Stocks and Acreage report tomorrow at 11 a.m. Chicago time and, as such, we don’t expect to see too much price movement during the session.

Yesterday, grains started mostly higher early in the day, but by the close it was apparent that basis strength was pulling the July contracts higher ― +7.75 cents in corn to $6.6550 and +9.00 cents for soybeans to $15.3425. New crop prices were a bit softer on the day with December corn down 0.50 cents to $5.4400, while November soybeans were down 2.50 cents to $12.7600.

Perhaps export sales this morning will trigger some movement, but sans a surprise there don’t expect too many changes today. Volatility continued to climb yesterday, as well, so spec traders could look to sell options ahead of tomorrow’s report.

This morning, we look for corn to open mixed -3 to +2 and soybeans 3 to 8 higher.

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