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 came to life of Friday, as 1,563 total trades took place in an overly bullish trading session. The 2012 contracts closed between 30 and 39 cents higher, while the 2013 contracts managed gains between four and 25 cents. The August through October 2012 futures pack gained 36 cents on the day to settle at $18.49, with a total gain of 38 cents for the week.

The Class III rally was sparked by the active spot session. which saw the block and barrels prices both move higher. Rising grain/feed prices, along with a massive loss in the value of the U.S. Dollar Index, added to the market bulls’ cause, as prices look destined for another move higher to start the week. Weather forecasts look to bring little relief to the heat and drought throughout much of the nation in the near term, which should add to the bullish tone of the market.

The grain markets continue to drive higher, as the current drought shows little sign of easing in the near future, having already ravaged many crops beyond the point of repair. The Dec12 corn contract settled 11 ¾ cents higher on Friday to $8.07 ½, with a gain of 14 ¼ cents on the week. The Nov12 soybeans managed a gain of 12 ¼ cents to close out the week at $16.28 ¾, with a weekly gain of 27 cents. The market bulls are in control for the time-being, as weather forecasts have yet to provide any relief.

Daily CME spot market prices:

Block cheese: $1.71 (up 1 cent)

Barrel cheese $1.685 (up 1 cent)

Butter: $1.69 (up 1 cent)  

Grade A NFDM: $1.40 (unchanged)

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