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

Several loads of cheese made their way to the CME spot session Wednesday. Barrels fell yesterday, down 2 cents on 1 trade and one standing offer, thus eliminating most of Tuesday's price appreciation.

Class III milk, on the contrary rallied, despite some midday price pressure, finishing between 20 and 33 cents higher from December through April. Early on, it appeared as if the market was finding support from short covering ― that can only provide so much support, however, and by day’s end it seemed as though active hedgers and spreaders were involved. Just over 2,000 Class III contracts were traded on the day, and the previously mentioned short covering seemed to be a healthy amount of that volume with open interest falling by 63 contracts.

Corn, soybean and wheat markets might have taken a breather on Wednesday, yet are poised to test upside resistance ― perhaps finding some bullish fundamental support following this morning's weekly export sales report. Beside this week, since the middle of September we have closed the corn market above $7.60 per bushel only one time. We appear to be consolidating at the resistance prices of last spring and summer.

Speaking of the export sales report, it shall be interesting to see the amount of soy oil that was booked last week. Over the past month, we have seen Asian buyers quietly booking large sales. This appears to be a “buy the finish product first,” then “buy the raw materials second” kind of play, but only time will tell. January soybeans at $14.45 per bushel might have advanced approximately 75 cents per bushel over the last 13 days, yet still stand $3.20 per bushel below September 2012 highs. Delayed plantings in the southern hemisphere for beans continue to support the market as well. 

We look for corn to open steady to 3 cents higher and soybeans 6 to 9 higher.

Block cheese: $1.825 (unchanged)

Barrel cheese $1.755 (down 2 cents)

Grade A NFDM: $1.5575 (unchanged)

Butter: $1.6225 (down 5 cents)

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