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

Class III enjoyed a brief reprise Friday from the recent drops in prices to close the session mixed.  The February through April pack closed at $15.99, up four cents. The Jan12 contract settled Friday at $17.05, roughly a dollar lower than the Dec11 contract settlement price. An active spot session helped to buoy the Class III, at least for the day, as buyers stepped up their interests at the sub $1.50 level. 

We look for Class III prices to continue to decline over the coming weeks. The lack of demand and over production reflected in recent reports highlights an entrenched negative trend, but a short-term bounce seems appropriate given the amount of losses in recent sessions.

Corn futures continued their upward climb winding the week near the highs. The gains may have seen some spill-over from the strong bean prices from Friday. 

Concerns with corn are coming with the threatened loss of acreage if the bean prices continue to be this strong. March corn ended up 1 ½ at $6.44 ½ on the correlating concerns; not to mention continued South American weather and crop damage concerns. Beans rallied 15 ½ cents to $12.32 ½ a bushel, helping with the support levels of corn.  For now, heat concerns in South America are prevailing as beans lead the pull upward.

We look for corn to open 2 to 4 cents higher and for beans to open 7 to 9 higher.

Daily CME spot market prices:

Block cheese: $1.485 (unchanged)

Barrel cheese $1.495 (up 0.75 cent)

Butter: $1.4925 (unchanged)

Grade A NFDM: $1.3575 (unchanged)

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