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

Despite a second day of CME spot cheese inactivity, Class III and cheese futures settled sharply higher Wednesday. The lack of bids during the spot session spooked traders Tuesday, yet the lack of excess inventory appeared to support futures trading yesterday.

October cheese futures failed to break through the $1.80 resistance level during the last four weeks, yet the market easily cleared that hurdle yesterday and October cheese futures led the entire complex. Oct was up 2.2 cents to $1.8140 per lb. Bidding was seen across the board. Q4 cheese futures settled up 1.6 cents to $1.7440 per lb. First-half 2014 cheese futures settled +1.28 cents to $1.67 per lb.

Spot session results:

Block cheese: $1.7825 (unchanged)

Barrel cheese: $1.77 (unchanged)

Grade A NFDM:  $1.805 (up 0.5 cent)

Butter: $1.43 (down 0.5 cent)

Grain futures were once again on the defensive yesterday.

Weekly corn conditions have deteriorated slightly yet their net short position has grown by an estimated 13,000 positions over the last two days. December corn futures closed 5.75 cents lower Wednesday to $4.695 per bushel, while November soybeans finished 34.25 cents lower to $13.525 per bushel.

In news well after the grain close yesterday, President Obama cleared his first hurdle towards initiating a military strike in Syria, as a key Senate panel voted to authorize the use of force. This vote and subsequent votes will be key factors to determining short-term direction in both the dollar and energy markets.

This morning, we look for corn to open steady to 3 cents lower and soybeans to open 5 to 10 lower.

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