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

The Class III futures market posted a total of 1,257 trades on Friday with mainly lower results after both the blocks and barrels fell lower during the spot cheese session. The 2013 futures contracts settled between one penny higher and 33 cents lower. The 2013 first-quarter futures pack average price settled at the price of $17.50, down18 cents for the day and down a total of 29 cents for the week. 

Milk production in the central U.S. continues to grow in many areas ― thanks in part to the mild winter weather conditions. Production in the Northeast and Mid-Atlantic regions is above year-ago levels, while demand remains steady. Out in the West and Northwest, dairy producers are contending with below-normal temperatures for this time of year, though the weather impacts on production are thought to be light.

Spot session results:

Block cheese: $1.6875 (down 1.25 cent)

Barrel cheese $1.6375 (down 1.25 cent)

Grade A NFDM: $1.53 (down 0.5 cent)

Butter: $1.505 (up 0.5 cent)

The grain complex closed out Friday’s trading session with mixed results. The Mar13 corn contract gained 3 cents for the day to close out at $7.27 ½, while adding a total of 18 ¾ cents over the entire week. The Mar13 soybean contract fell lower by just a penny for the day to close at $14.29 1/4, while gaining a total of 56 cents over the week prior. The Mar13 wheat contract gained 10 cents Friday to settle at $7.91 ¼, while adding a total of 46 ½ cents for the week. The overnight session saw extremely light volume and continued the bullish trend, particularly of strength in old crop vs. new crop; the bull spreads keep working.

We look for corn to open 3 to 6 cents higher and beans 15 to 20 higher.

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