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

Class III markets emphasized the choppy tone as of late yesterday with futures ending the day mixed. Class III was a bit firmer in the nearby months with Q4 futures settling +9 to +12, while deferred contracts settled anywhere from -5 to +2. The cash market did little to spur activity (584 contracts traded) with both blocks and barrels settling unchanged with no trades, bids or offers left on the board. Currently, the 2014 pack is at $16.79, trading in a fairly tight 15-cent range for most of September. 

After several weeks of cheese prices climbing, the market seems to be displaying some “cracks” with prices falling off recent highs. However, this is still a far cry from a year ago. If you recall, prices hit the $2.00 mark on Sept. 20,  2012, and held until Nov. 7. Even as we hear of tight milk supplies, healthy exports and decent demand, heavy inventories have tempered any gains. The volatility we saw in August seems to have dissipated, along with heat concerns and questions surrounding Oceania production. With fundamental news mixed, we can expect this “tug-o-war” to continue, in the short term, with the potential for some further gains attributed to holiday demand.

Spot session results:

Block cheese: $1.7825 (unchanged)

Barrel cheese: $1.745 (unchanged)

Grade A NFDM:  $1.845 (unchanged)

Butter: $1.605 (unchanged)

The grain markets finished mixed yesterday, as well, with December corn down 4 ½ cents and November beans gaining slightly on the day, up 4 ¾ cents. The best description of the activity was likely as simple as a “turnaround Tuesday.” Cooler weather and some recent rains have been beneficial for late-planted crops. Nationally, 55 percent of the corn crop is rated in good condition, up slightly from 53 percent, while soybeans remained essentially unchanged with 50 percent rated as good. Corn harvest reports continue to show better-than-expected yields as the harvest pace hastens. 

This morning, we look for corn to open 1 to 3 cents higher and beans 3 to 7 higher.

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