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

It was a much-anticipated spot session after the massive declines seen Wednesday. But when nary a trade or price movement occurred on the cheese markets, it became a relatively light session with just over 1,000 contracts traded on the heels of a 2,000-contract day Wednesday.

The lack of follow-through selling on the spot session sent futures higher across the board by the close. Prices from Nov all the way through Dec 2013 were higher by 1 to 22 cents. January and February led the gains up 22 and 17 cents, respectively. Chatter around the market was that cheese is quickly starting to free up in the Midwest, and that seems likely to keep bulls on the defensive in the coming sessions. We now hear talk of $1.90 cheese, and potentially below on the physical market, which the futures have been pricing in. December continues to trade at a sharp discount, settlement of $19.88, +0.06 yesterday, vs. spot valuation of Class III near $20.20.

The grain complex traded mostly lower yesterday on yet another slow week of export sales and ahead of the USDA report this morning. Corn closed down 3 cents at 741.25 and weekly sales were 6.2 million bushels vs. estimates of 3.9 to 11.8. Soybeans finished the day down 9.5 cents at 1499.25 with weekly sales at 7.0 mln bushels vs. estimates for 14.7 to 25.7.

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