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

Class III futures opened the session to double-digit losses, with June trading down as much 28 cents and July down 10. But deferred contracts rallied ahead of the spot session, pulling all but the June contract into the green. With an unchanged block and barrel during the spot session, futures finished yesterday settling anywhere from -0.22 to +0.12. Most months did close higher on the day as the block market traded up to $1.87 before coming back to $1.8650 The current July-Dec pack is trading near $18.70, nearly 24 cents below its 20-day moving average. 

After a few weeks of choppiness, the market seems to be brushing off some of the bullish concerns from an international perspective and is focusing on the domestic picture. With cheese stocks above year-ago levels and barrels in excess coming into the flush, the picture looks a bit bearish domestically. Throw in the fact that more milk will be going into manufactured dairy products shortly with the school year coming to an end, as well as unfavorable weather for grilling, and you have a pretty bearish outlook in the near term as noted by the 79-cent decline in July since April 29. Weather still remains the x-factor. And should wet weather continue through Memorial Day, corn prices would most likely move higher, likely supporting Class III as well.

Spot session results:

Block cheese: $1.865 (unchanged)

Barrel cheese $1.735 (unchanged)

Grade A NFDM: $1.70 (down 3 cents)

Butter: $1.63 (down 0.75 cent)

In the grain complex, July corn settled down 7 cents to 6.33, while July beans were up 8 ½ cents to 1391 ¼. Corn was under pressure throughout the day as weather forecasts improved and hopes were that the last half of May would allow for active plantings. Old crop beans were the leadership group on Wednesday, as commercial buying pushed soybeans higher. Domestic U.S. tightness in soybeans may find commercials continuing to squeeze the nearby contracts. USDA may again lower the China import estimate in Friday’s S&D, as total China soybean imports are overestimated based on the pace and bird flu fears. We look for a more moderate trade today ahead of the USDA report tomorrow morning.

This morning, we look for grains to open mixed, as all of the grain markets were within 3 cents of unchanged overnight.

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