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

It was a good two-sided trade on more moderate volume for both Class III and cheese contracts Thursday, resulting in a mostly lower close for futures prices. After open slightly higher and, in some cases, retesting Wednesday’s spike top, a lackluster spot session left little to be desired by market bulls. Futures faded when strong bidding out of the gate on both block and barrel cheese proved to be more bark than bite. Blocks finished up .25 to $1.5025, while barrels settled unchanged at $1.4700. 

For the week ending May 12, dairy cow slaughter under federal inspection was up 10 percent, at 57,300 head, compared with the same period the previous year. Year-to-date slaughter levels are 2.1% higher than 2011 levels, with 1,147,900 head slaughtered.

In the grain complex, the greatest influence on prices right now ― and probably for the next 30 to 45 days ― is weather. With early-planted crops off to a good start, beneficial weather is a big negative to prices. The other side of the story, however, is that although small plants don’t need much water, top soil moisture readings are declining each day and we need rain or prices will quickly be back up challenging recent highs. Trading grains in late May and early June is not for the faint of heart. Overall, the grain ― especially corn ― maintains a mostly bearish posture.  We think it only a short time before we trade a $4 handle on new crop corn.

Export sales released yesterday were largely weaker than expected. Net corn sales of 156,100 tons were down 54 percent from the previous week. Net wheat sales of 72,400 tons ― a marketing-year low ― were down 78 percent from the previous week. Sales for soybeans, however, were real strong with net sales of 800,100 tons up 30 percent from the previous week. 

We look for corn to open 7 to 9 cents higher and soybeans to open 4 to 6 higher.

Daily CME spot market prices:

Block cheese: $1.5025 (up 0.25 cent)

Barrel cheese $1.47 (unchanged)

Butter: $1.3875 (up 0.25 cent)  

Grade A NFDM: $1.1425 (up 0.25 cent)

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., International Assets Holding Corporation, 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.