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

Class III futures continued their decline on Tuesday as the spot markets came under pressure. The barrel market started the declines, falling to $1.6550 before a trade occurred, and the blocks fell to $1.7100 as well before any trades took place. By the close, however, prices had come off their lows with barrels coming back to close unchanged at $1.69, while blocks moved a penny off their lows to $1.7200. For a while, it looked as though prices would stay fairly stable with the bounce from the lows in spot; however; after trading steady to 5 lower for a period of time, prices in Feb and March dropped by 21 and 19 cents other 2013 months finished from 1 higher to 8 lower as volume still remains relatively light as less than 1,000 trades took place on the day. The wide block/barrel spread closing through blocks falling certainly affected the nearby months. And Feb has given up 50+ cents in just two days, leaving us questioning how much downside can remain there. We’d look for a slight bounce back today, though sell-side pressure should remain on the spot session. We have our doubts as to how much further spot prices will fall in the short term.

Spot session results:

Block cheese: $1.72 (down 4 cents)

Barrel cheese $1.69 (unchanged)

Grade A NFDM: $1.5575 (unchanged)

Butter: $1.45 (down 3.5 cents)

Grain markets continued to move mostly higher ahead of Friday’s USDA report, but a slight sell- off at the close brought the market back to mixed. The term “readjustment” comes to mind early this week, particularly in regard to the corn market. As the long-awaited report draws nearer, the market seems to be bouncing back a bit after losing some 70+ cents since the first week of December. On the day, March corn finished 3.25 cents higher at 688.75; soybeans were 2 lower to 1386.5, while wheat finished down 0.75 cents at 760.25.

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

These data and comments are provided for information purposes only and are not intended to be used for specific trading strategies. Commodity trading is risky and FCStone Group, Inc., INTL FCStone Inc., and their affiliates assume no liability for the use of any information contained herein. Although all information is believed to be reliable, we cannot guarantee its accuracy and completeness. Past financial results are not necessarily indicative of future performance. Any examples given are strictly hypothetical and no representation is being made that any person will or is likely to achieve profits or losses similar to those examples. References to and discussions of exchange traded products are made solely on behalf of FCStone, LLC. References to and discussions of OTC products are made solely on behalf of INTL Hanley, LLC, and OTC products are only available to eligible counterparties.