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

The Class III futures chopped their way throughout the day’s trading session to finish mostly higher by settlement with less than 1,000 trades taking place. The March contract finished down 4 cents to $17.05, while the remaining 2013 contracts closed out the day between unchanged and 10 cents higher. 

The steady price action came about due to the reversal of the recent bearish trend in the spot cheese session, with the blocks managing to post a gain of 0.25 cents, while the barrels remained unchanged. The February 2013 Class III contract settlement price was announced at $17.25.

The bounce in Class III prices looks to be more of a bear bounce rather than a shift in market sentiment, with power price action expected in the near-term.

Spot session results:

Block cheese: $1.605 (up 0.25 cent)

Barrel cheese $1.58 (unchanged)

Grade A NFDM: $1.4975 (unchanged)

Butter: $1.55 (unchanged)

In the grain complex, a choppy day of trading spurred on by a mix of bullish and bearish news.  Buyers located out of both Asia and the U.S. have stepped back into the marketplace of late after the recent drop in pricing. Much-needed rains are expected to reach some of the major growing areas of Argentina in the coming days; some estimates call for up to two inches of rain, while logistical issues still plague Brazil’s effort to move grains to the ports for exportation. 

The soybean complex proceeded to chop to and fro throughout the day, giving up most of the overnight gains in the morning, only to rebound in the afternoon before shedding a portion of its gains into the close. The March soybean contract closed out the day up 9 ¾ cents to $14.57 ½.  The December corn market fell lower from its early morning high ($5.58 ½) throughout the course of the day before posting a modest bounce into the close, ending the day down 2 ½ cents to $5.53 2/4. 

We look for corn to open steady to 5 cents higher and beans to open 2 to 6 higher.

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