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

Moderate trading volumes and moderate price volatile have been hallmarks by which to measure the last full trading week of the month and quarter. The Class III market is caught in limbo between weaker spot cheese price action this week and still-lofty Class IV prices. Pre-holiday demand seems to be well balanced by supplies of fresh cheese. Promotional activity appears to be sluggish to start this holiday season. On the other hand, we look at the powder markets, consider the somewhat uncertain international marketplace and wonder how much of a price spread between Class III and IV products is really sustainable ― and for how long. We’re not sure, but we expect the current spread to continue into the month of October.

Class III futures finished mixed Thursday on moderate trading volume of 1,142 contracts.   Cheese futures eclipsed 200 contracts, but fell short of Wednesday’s trading volume. Both markets turned lower during first few minutes of spot trading, but regained footing upon resilient buyers biding for both blocks and barrels. Trading activity spans well into 2014, as there appears to be a relatively even mix of light commercial buying and producer sell-side activity. With spot block and barrel cheese at $1.75 and $1.72, respectively, both Class III and cheese markets look poised for more of a mixed trade to end the week. 

Spot session results:

Block cheese: $1.75 (down 2 cents)

Barrel cheese: $1.72 (unchanged)

Grade A NFDM:  $1.82 (down 2.5 cents)

Butter: $1.61 (unchanged)

Grains finished mixed Thursday with corn and wheat futures 5 to 7 cents higher and soybean and bean meal futures both modestly lower on the day.  Export sales were strong across the board, but the market is choppy ahead of Monday’s final Grain Stocks figures of the year. Monday’s report is expected to deliver ending-stocks figures close to 675 million bushels for corn and 125 million bushels for soybeans. While we expect that the surprise would be lighter than expected numbers, looking back at this September report shows surprises have come in to the contrary.

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