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 concluded the week of trading with little variance in pricing. The futures contracts settled between 3 cents lower and 7 higher on just over 800 total trades, after a strong showing earlier in the week. The 2013 second-quarter futures pack settled for the day unchanged at the price of $17.73, while adding a total of 30 cent over the week prior.

The strong gains posted in all of the markets of the GDT auction held last Tuesday helped to bolsters the bulls’ efforts to push the market higher, while the results of the Dairy Products Report for the month of January still leave plenty of room to question the recent surge in dairy prices. The WASDE report released March 8 pegged 2013 milk production at 201.9 billion pounds, up 1.07 percent from the previous estimate and 1.6 billion pounds ahead of 2012’s tally.  New Zealand is currently facing a drought that has resulted in the North Island regions having received only 50 percent of the normal amount of rain fall, with some areas receiving as little as 33 percent of normal rain fall. 

For the week ending February 23, the dairy cow slaughter under federal inspection decreased by 1,200 head (1.83 percent) week over week, totaling 64,400 head. The year-to-date slaughter now totals 517,300 head, 5.6 percent higher than during the same period last year. 

Spot session results:

Block cheese: $1.60 (up 1 cent)

Barrel cheese $1.58 (unchanged)

Grade A NFDM: $1.4975 (unchanged)

Butter: $1.63 (up 1.5 cent)

Friday’s grain trade was left to contend with the USDA’s crop production and Supply and Demand report that produced a volatile trading session. The May corn contract ended the day with a gain of 12 ¼ cents, after first plunging into negative territory following the release of the report, yet still lost five cents of value week over week. The May soybean contract closed out the session at $14.71 with a loss of 2 ½ cents, rebounding mightily into the end of the session from an over 20-cent deficit, while shedding 27 ½ cents throughout the week. 

This morning, we look for grains to open modestly higher across the board.

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