Class III futures gained strength Monday

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

Class III futures found some support in yesterday’s session on the heels of Friday’s bullish Cold Storage report and an active spot cheese session.

While volume was fairly well contained to Dec. 13 and the first quarter of 2014, we still saw gains across the complex. Class III gained anywhere from 1 to 20 cents in the 2014 contracts, and the first half average gained  0.14 cents to settle at $17.02. The 2014 yearly average gained .08 cents to $17.09, and volume came in at just over 1,100 contracts on the day. While action was to the upside, one should be cautious heading into the middle of a holiday week. Volume will get lighter as we approach the holiday with traders heading home to be with family. We could also see volatility pick up going into Wednesday, so keep your risk in check.

Spot session results:

Block cheese: $1.85 (up 1.5 cent)

Barrel cheese: $1.7475 (down 0.75 cent)

Grade A NFDM:  $1.985 (unchanged)

Butter: $1.665 (down 1.5 cent)

Grain markets continued their positive ways from last week, putting in gains across the board.

March Corn futures added 2 cents yesterday to close at $4.3125. While we are not seeing a lot of action out of the contract, there is a steady grind to the upside going on as we see traders finish rolling positions out of Dec. 13 this week. Funds have also been lightening up their overall short position for the last three sessions. No real resistance exists until the $4.40 area and then again until $4.50 for the March contract. It will be difficult to find the short-term momentum to challenge those areas.

Beans did a complete 180 on the day. We started off 10 cents lower only to finish 9 ¾ cents up on the day at $13.2925. The USDA pegged inspections at 66.9 million bushels which was just below trade estimates, but enough of a push to continue the upside momentum of the market. We also saw funds continue to add to their overall long position and give the market more of a bullish tone. For the most part, beans are planted in South America and the forecast looks good. The wild card is the demand for beans from Asia and Mexico. Will there be enough to satisfy their voracious appetite for product? Right now, the market tells us NO. As with everything commodities, cover your risk. This market has become a juggernaut with corn traders looking for action in other markets.

This morning, we look for a lower open to the grain complex.

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