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

The Class III futures market closed last Friday’s active trading session with 1,331 trades taking place. The March through September futures settled with prices losing between 4 and 17 cents, while the February, October and November contracts all remained unchanged. The December contract posted the sole gain for the day, adding 3 cents to finish at the price of $18.15. The 2013 second-quarter futures pack lost 15 cents Friday to finish the week at the price of $17.66, while slipping a total of 38 cents lower over the week prior.

Ideal weather recently in California has led to production increases, with some reports of production surpassing 2012 levels for the time this year. Milk production in the Central and Northwestern regions remains steady, with a small increase seen in the Southeast.  

According to the USDA’s Livestock, Dairy and Poultry Outlook, the 2013 average Class III price is estimated to range between $18.90 and $19.60, up sharply from 2012’s average price of $17.44. 

Spot session results:

Block cheese: $1.675 (unchanged)

Barrel cheese $1.63 (down 1 cent)

Grade A NFDM: $1.505 (unchanged)

Butter: $1.605 (up 0.25 cent)

Friday’s grains trade resulted in bullish price gains in for the complex. The Mar13 corn contract gained 4 cents during Friday’s trade to settle at the price of $6.98 ¾, yet still posted a week-over- week loss of 10 ¼ cents. The Mar13 soybean contract gained 6 ½ cents on the day to settle at $14.24 ½, yet lost a total of 28 cents week over week. 

Rain and snow across the central U.S. over the previous week has done little to alleviate all of the concerns of an impending drought. 

We look for corn to open steady to 3 cents lower and beans to open 15 to 20 higher.

These data and comments are provided for information purposes only and are not intended to be used for specific trading strategies. Commodity trading is risky and FCStone Group, Inc., INTL FCStone Inc., and their affiliates assume no liability for the use of any information contained herein. Although all information is believed to be reliable, we cannot guarantee its accuracy and completeness. Past financial results are not necessarily indicative of future performance. Any examples given are strictly hypothetical and no representation is being made that any person will or is likely to achieve profits or losses similar to those examples. References to and discussions of exchange traded products are made solely on behalf of FCStone, LLC. References to and discussions of OTC products are made solely on behalf of INTL Hanley, LLC, and OTC products are only available to eligible counterparties.