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

It was a slow start to a shortened holiday week with Class III futures trading less than 800 contracts Tuesday.  Prices started off the day somewhat lower in the front months and a bit higher in the distant months and finished that way.  On the spot markets, blocks were unchanged at $1.79, while barrels declined ¼ cent to 1.7575 on 6 trades. Although barrels slipped a little, buyer interest remained strong, and that helped buoy prices and keep Class III from slipping too far in the front months.

Cheese futures were unchanged on light volume with 6 contracts traded. It seems that the futures shrugged off the declines in Oceania, as did Class III. Few price changes were seen, but those months that did move were slightly higher with settlements from steady to +0.003.

Grains decided to again reverse course after the long weekend with prices falling slightly though not too sharply ahead of the crop condition report and ahead of next Monday’s USDA crop production report. Macroeconomic factors were playing a big role in price movement today with the dollar up nearly 1000 points. Informa estimated corn yield at 151 and soybeans at 41.5 down from their previous estimates, but ultimately a bit bearish given current price levels. Wheat production globally was also up 10 mmt from the previous USDA estimate.

After the close, crop progress reports had corn “good to excellent” ratings down 2% and soybeans off 1% from last week as the weaker trend continues. Overnight prices responded by trading mostly higher with corn up 1 to 3 cents, soybeans up 4 to 7 cents and wheat up 4 to 6 cents. We look for prices to continue to chop now into the USDA report with expected fair values around 750 corn, 1425 soybeans and 750 wheat.

We look for corn to open 6 to 9 cents higher and soybeans to open 8 to 10 higher.

Daily CME spot market prices:

Block cheese: $1.79 (unchanged)

Barrel cheese: $1.7575 (down 0.25 cent)

Butter: $1.995 (down 1 cent)  

Grade A NFDM: $1.49 (down 2 cents)

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