Nearby Class III futures down Monday

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

The Class III markets continued their move down from Friday’s session yesterday, pulling 4th quarter and first half 2014 contracts lower on another light volume session.

Technically, the market has been overbought for a while and the pull-back has been long overdue.

The December 2013 contract was the downside leader yesterday, settling down -.17 cents to $17.55 on an estimated 688 trades. The second half 2014 contracts generally traded higher with the Oct. 14 contract settling up .05 cents at $17.10 on the session. We will be watching to see if this is the start of a longer-term trend, but at this point it seems as though it is more of a technical move to get the complex off of the overbought condition we have been in since late September.

Class III milk and cheese are continually reported as plentiful, all through a large technical rally. Powder is the support, but all bulls need a breather and this pullback is just that as people take in new/old data and probably realize Class III simply ran ahead of itself in at least the short term.

Spot session results:

Block cheese: $1.8575 (unchanged)

Barrel cheese: $1.76 (down 0.25 cent)

Grade A NFDM:  $1.86 (unchanged)

Butter: $1.465 (down 1.75 cent)

In the corn market yesterday, weekly export inspections came in at 32.2 million ― well above last year, but with rain and snow in the forecast for the Midwest this week we may see harvest delays as producers are working hard to get that crop in before the hard frost. Dec. 13 Corn settled at $4.4400, up 2 ½ cents on the session. Soybean export inspections came in at 59.3 million vs. 65.5 million last year and trade was looking for confirmation on Chinese buying interest for beans. The market closed up 12 cents to $13.0325, which is above short-term resistance at $13.0125, and we will watch to see if we get more of a continuation rally out of the contract in the short term.

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