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

The Class III roller coaster ride continued yesterday with the markets erasing most of the gains from the previous session.

The August contract saw the most volume and the greatest losses coming in at $17.80/cwt., down -23 cents on the session and total volume was a little higher than the previous session at 1,152 contracts. The market started off mixed to lower early in the session until spot when we saw the downslide pick up steam on lower barrel prices. Initially, the market came down heavy but managed to climb back a little before the close of the day. The only official bullish note to the day was the July 14 contract which settled up +10 cents on the session to close out at 17.31/cwt. 

The monthly WASDE report was also announced yesterday and showed an increase in production to 202.0 billion pounds which was a 1.13 percent increase from the previous year, showing that we still have ample supplies in the system and backs up the bearish feel the market has had since the middle of June.

Spot session results:

Block cheese: $1.675 (up 0.25 cent)

Barrel cheese: $1.67 (down 1.5 cent)

Grade A NFDM:  $1.745 (up 0.25 cent)

Butter: $1.495 (down 1.75 cent)

Corn and soybeans, where do we begin? In a day filled with reports, we saw these markets trade both sides of unchanged (at least for new-crop contracts) only to settle around their respective highs for the day.

For corn, exports were stronger than anticipated, which should have started the Dec. contract on an upswing, but they slid right after the open on positions squaring and lackluster activity prior to the USDA report. That slide continued until S&D reports came out at 11 a.m., which initially sent the market to its low of the day at 5.1025 only to have it run to test earlier highs at 5.2800 and settle at 5.2700 up 5.5000 on the session. Beans followed a similar path on the day, except  export numbers were weaker which kept the market supported up until the S&D report where the Nov. contract set in a low of 1272.00 and did nothing but rally back to its highs and settle out at 1290.75 up + 9.50 on the day

What does this all mean? Basically, we saw yields unchanged at 156.6 bpa. for corn and increased carryout numbers for corn and beans as expected, which should have been a non-event or even pushed markets lower. But, seemingly, the trade was focused on a yield number they thought was going to come in higher, as well as recent Chinese purchases.

There were also some outside forces at work that gave a lift to the grains. A much lower U.S. dollar and a move down in crude after a 12-day straight up run provided support to markets that some might argue should not have had the reactions that they did off of the reports.

This morning, we look for the grain complex to open lightly mixed.

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