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

Class III futures settled anywhere from -19 to +10 through 2014, giving up the double-digit gains seen in the overnight session and throughout the early morning. 

This, no doubt, in reaction to a lackluster spot session as both blocks and barrels failed to move higher on the heels of the September Milk Production report. Both blocks and barrels remained unchanged on the day with no bids, offers or trades on the board. Coming into the morning, the Dec-Feb contracts saw strong gains with January getting as high as $17.52 only to reverse course and end the day near session lows. Currently, the 2014 Class III pack is trading at $17.00, gaining roughly 20 cents since Oct 1st.

Overall, little has changed fundamentally with holiday demand pushing prices higher. Selling activity in the block cheese market during October was steady, but below the 2012 monthly average of 75 loads at 33. Support for the market has settled in the middle-$1.70’s, as the price is approaching the calendar year high of $1.9150 set on May 6. The block cheddar cheese price is currently 13.75 cents above the ending price for September at $1.9025, while the barrel price is 15.50 cents higher at $1.8700. For 2013, the price curve is wider than it was last month, but remains less than the level needed to account for normal seasonality. 

Spot session results:

Block cheese: $1.9025 (unchanged)

Barrel cheese: $1.87 (unchanged)

Grade A NFDM:  $1.91 (unchanged)

Butter: $1.545 (up 1.25 cents)

The corn market was quiet as traders patiently await the Nov. 8 production estimates. Futures settled down a penny to $4.2625 on the day.

FCStone estimates looking for a corn yield at 161.2, which could produce a record 14.22 billion bushel crop with a record 15 billion bushels to store at harvest. With this news, futures are currently trading at 38-month lows. Weekly U.S export inspections are double what they were a year ago at 31.3 million.Soybean prices rallied a bit today, with Jan. beans settling up 5 cents to 1256 ½, as talk of increasing Chinese demand was front and center. FCStone is estimating the soy yield at 42.8. 

This morning, we look for grains look to open mixed with corn -2 to +2 and beans 2 to 6 higher.

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