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

While there remains some caution in the market as participants wait to see when cheese sellers will return, it was the spot butter market that inspired slightly firming prices in Class III yesterday. Commercial buyers who are looking for coverage appear to be the buyers across the board, but primarily in the very uncertain — and seemingly undervalued — second half of the year. 

This is retail promotion season, and with the heat we’ve had throughout the country lately many are worried it could get real hot and impact production. Still, the fact remains that currently we have a glut of milk; we remain current fundamental bears, but cautious of pop capabilities. Those who subscribe to the grain/milk correlation theories will also see bullish arguments on that with strong feed prices on the board. We are actively recommending hedging strategies that allow some wiggle room in price. Call for suggestions.  

In the grain complex, beans continue to lead a rally and support the other grain markets from significant slippage, as talk of an acres fight gets some traction.

We look for corn to open 3 to 5 cents higher and for beans to open 10 to 13 higher.

Daily CME spot market prices:

Block cheese $1.5075 (unchanged)

Barrel cheese $1.5525 (unchanged)

Butter:  $1.5075 (up 1 cent)  

Grade A NFDM: $1.2675 (unchanged)

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