Class III futures trade mostly to downside Thursday

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

Another action-packed day yesterday for the Class III markets, but this time we were mostly lower by the end of the session.

With the three previous sessions putting in new high after new high, we were bound for a pull-back and got it yesterday. We started the day on a lower note and then took off to the downside after a much lower spot session. The Jan. 14 contract trade as much as .50 cents lower at one point in the day, only to see the complex steadily recover throughout the rest of the session. The first-quarter pack average settled down .14 cents to $17.96 and the 12-month average was down .06 cents overall to settle at $17.45. The second-quarter pack actually recovered and turned positive before the close and settled up .03 cents to $17.30. There could be some sentiment that as we go into spring flush in the second quarter, we could see some overall tightness in the market.

While the fundamentals are still bullish from a technical aspect, we could still see further selling today to test near-term support, especially in the first-quarter contracts. With sporadic reports of pounds of milk per cow declining, dry weather in the West, and colder temps moving into the U.S. for at least the next week, it may be hard to get this market to push too much farther to the downside.

Cheese markets followed the lead from Class III, putting in lower numbers for both spot and the cash-settled futures. The spot session saw blocks and barrels both offered down right from the start and losses capitulated as the session went on. Blocks traded three times and settled down 7 ½ cents to 187.250, while barrels were offered down 5 ¼ cents to 183.250.

Spot session results:

Block cheese: $1.8725 (down 7.5 cents)

Barrel cheese: $1.8325 (down 5.25 cents)

Grade A NFDM:  $2.0325 (up 0.25 cent)

Butter: $1.64 (unchanged)

The grain markets were generally lower on the day. March 14 Corn settled down 3 cents at $4.3350 after challenging the $4.30 support level early in the session. Export sales were lower than expectations and a slightly higher crude market kept the pressure on throughout the session. Soybeans started off higher and gains dwindled into negative territory as the day wore on. Export sales here were also lower than expectations and moved the market almost 10 cents lower by mid-morning. We saw some buying activity come in on the lows and moved the market back towards unchanged levels. Beans closed out down 1 ¼ cents to settle at $13.28.

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