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

The Class III futures ended Friday’s trading session with the 2012 futures contracts falling between 16 to 27 cents lower, while the first half of 2013 futures slipped between 9 and 18 lower. The fourth-quarter futures pack average fell 19 cents on the day to $20.74, yet still closed out 22 cents higher than the week prior. The spot session failed to provide any activity in either the blocks or barrels. 

Milk production is increasing in the Northeast, Mid-Atlantic and Southeast, while demand remains strong in those areas. Milk production in the Midwest and West remains steady, though supplies are sporadic in portion of the West. The global dairy price for all products increased by 7 percent in September, while the all-foods price increased by a margin of 1.4 percent.

The U.S. dairy cow weekly slaughter for the week ending 9/22 totaled 63k head, down 0.64 percent from last week. Total head slaughtered year to date totaled 2.2236 million head, up 5.8 percent over the same period last year.

The grain futures markets closed out the week with mostly lower prices, coaxed lower in part by the results of the Informa crop estimates. 

The Dec12 corn contract fell 9 cents to $7.48 for the day, while losing a total of 8 ¼ for the week. The Nov12 soybean futures finished the day unchanged at $15.51 ½, though lost a total of 49 ½ cents on the week. The Dec12 wheat contract fell 11 ¾ cents Friday to $8.57 ½, while falling 45 cents lower throughout the week.

Friday saw the release of Informa’s crop production and yield estimates, with results that helped to add to the bearish sentiment that pushed prices lower throughout the latter half of the trading session. Informa pegged corn production at 11.194 billion bushels, 101 million bushels greater than their estimate for the month of September and 467 million bushels higher than the USDA’s September estimate. The corn yield was estimated at 127.0 bushels per acre, just 0.4 bushels higher than their September estimate, while 4.2 bushels higher than the USDA’s previous estimate. Informa’s soybean production estimate increased by 197 million bushels from September to now total 2.860 billion bushels, 226 million bushels higher than the USDA’s last estimate. The soybean yield was posted at 37.8 bushels per acre, 2.6 bushels higher than their September estimate and 2.5 bushels higher than the USDA’s prior estimate. 

The corn crop good to excellent rating released last Monday, Oct 1, gained 1 percent from the week prior to now sit at 25 percent G/E, while still 27 percent below last year’s corn crop rating for this time period. The corn harvest is now 54 percent complete after progressing by another 15 percent through the week prior. 

Look for the corn to open 5 to 8 cents lower, and for beans to open 10 to 15 lower.

Block cheese: $2.10 (unchanged)

Barrel cheese $2.06 (unchanged)

Butter: $1.86 (down 9.25 cents) 

Grade A NFDM: $1.66 (unchanged)

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