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

Class III futures opened the week relatively quietly as prices traded mixed early on light volume ahead of the spot session.

That spot session saw heavy activity as prices first moved lower, falling all the way to $1.7200 before moving back higher and closing at $1.7275 ― still posting a sizeable decline of 1.75 cents on seven total trades. Class III futures responded with some expected weakness, though that seemed to be muted due to the recovery prior to the close. On the day, July finished down 17 cents, while other 2013 contracts were steady to -5 cents on the day. 2014 contracts were mixed, but mostly higher yesterday from -6 to +8 cents.

Market chatter continues to be of burdensome inventories along with solid milk production and a few excess loads available. There is little on the short-term horizon to indicate hot temperatures will impact production as forecasts are for below-normal temps in the Midwest in the six- to 10-day window. And though there has been some sporadic heat in the West, its impact on production seems minimal.

Spot Session Results

Block cheese: $1.7275 (down 1.75 cent)

Barrel cheese: $1.7075 (unchanged)

Grade A NFDM:  $1.68 (unchanged)

Butter: $1.54 (unchanged)

It was a wild back-and-forth day for the grains as soybeans supported corn and wheat early, but a mid-morning sell-off saw corn go from 5 higher to 15 lower in a very short time. What was a buy corn/sell soybean mentality a few weeks ago has now flipped with soybean planting so far behind and forecasts remaining wet well into mid-June. What looked to be an expanding soybean acreage number now may actually be less than originally thought and that has continued to keep those prices moving higher. On the day, July corn was down 6.25 cents to $6.5575 and December corn was down 8.50 cents to $5.8875. Both bounced from their lows on late day buying. Soybeans were 22.50 cents higher in July to $15.3250, while new crop was up 21.25 cents to $13.2550. The market is dealing with a lot of uncertainty right now so we expect to see sharp volatility. But prices may not move too much higher until more can be confirmed in regards to the final planted acres for both corn and soybeans, as well as corn yield potential.

This morning, we look for corn and beans to open 5 to 15 cents lower.

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