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

Class III prices traded to sharp losses in nearby months yesterday. Volume remained very light as was the case during Monday’s session with yesterday’s volume coming in at an even lighter total of just 561 trades on the day. March futures finished the day 27 lower, trading as much as 40 lower; April finished down 28, trading as much as 32 lower, while February and May through July finished 3 to 16 lower. Interestingly, deferred contracts were very mixed but mostly higher, ranging from -14 to +9 with trading volume in each month out to August 2013.

Interesting to note that though the spot market ended slightly lower — barrels down 0.25 cents and blocks unchanged — Class III futures traded to the steep losses despite dry whey futures closing mostly higher with the exception of March and April. Nearby months are nearly on par with the spot equivalents. It seems that we will need to see declines in either the spot market or whey futures as Class III futures have been very reluctant to lead declines in either market over the past few months, despite the sharp losses that have been seen.

The grains turned in a very lackluster session yesterday as prices traded in very narrow range throughout the session, despite the large movement in the U.S. dollar. Ultimately, yesterday corn finished 2 lower at 642.25, beans were off a penny at 1232 and wheat was down 6.25 cents at 662.25.

We look for corn to open 4 to 6 cents higher and for beans to open 6 to 8 higher.

Daily CME spot market prices:

Block cheese: $1.48 (unchanged)

Barrel cheese $1.5025 (down 0.25 cent)

Butter: $1.445 (down 1.75 cents)

Grade A NFDM: $1.3325 (unchanged)

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