Editor’s note: This market commentary is provided by the Dairy Division at FCStone/Downes-O’Neill in Chicago, Ill.
The holiday doldrums were still with us yesterday, even with the passing of the Thanksgiving Holiday. Class III settled anywhere from +2 to -23 on light volume, with 547 contracts trading by the close of the pit session. Lack of direction in the spot market did not help with blocks unchanged and barrels bid up 3 cents, perhaps a move to get the spread in line. Overall, traders may once again be sitting on the sideline, reassessing, after the recent volatility the market has experienced.
We expect the choppiness in the market to continue in the short term. As stated, traders are most likely digesting the mixed signals stemming from the recent reports released by the USDA. With flat milk production and tighter inventories, traders will most likely be focusing on the demand picture. Although domestic demand was better than anticipated during the spike in cheese prices, much of it has yet to trickle down to the consumer level. That being said, with the recent move lower the market may have found its comfort zone, at least for the short term.
Grain markets saw a relatively uneventful day with March Corn settling up 1 ½ cents and March Beans up 9 ¼ cents on the day. With the Nov. 30 deadline for the EPA to announce 2013 biofuel volume obligations, volume was very light across the grain markets yesterday. Argentina planting is near 65 percent complete; however, additional rains are expected which may cause continued delays. Ukraine has exported a record amount of wheat so far this year in an effort to get in front of increased restrictions starting Dec. 1.
We look for corn to open 2 to 5 cents higher and soybeans 7 to 11 higher.
Block cheese: $1.825 (unchanged)
Barrel cheese $1.775 (up 3 cents)
Grade A NFDM: $1.5575 (unchanged)
Butter: $1.68 (down 1 cent)
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