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

Class III yesterday was moving actively before and during the GDT auction which left prices lower as GDT sagged; however, post a firm spot cheese market, Class III futures rallied back to close mixed with small losses in front months and small gains in back months. On the day, volume was light at just 769 contracts in Class III. Prior to the GDT report, the market fell off sharply and stayed down until the spot session started. We saw blocks trade up yesterday +1 ½ cents to 1.9000 on 1 trade, and we finally had an up day with the barrels closing up +1 cent to 1.6700 on 1 trade — the inordinately large spread widened further and the talk this week at the ADPI conference was pretty much in unison that a wide spread should last at least the month. The spread is now a wowing 23 cents and one major impact is in the basis risk for those hedging block cheese with Class III or cheese futures.

Spot session results:

Block cheese: $1.90 (up 1.5 cent)

Barrel cheese $1.67 (up 1 cent)

Grade A NFDM: $1.76 (unchanged)

Butter: $1.69 (unchanged)

Yesterday, grain prices were down across the board as Chinese manufacturing data were bearish and lent concern to their buying potential ― this overwhelmed some otherwise bullish weather reports. We will have another stretch of cooler wet weather (snow again in some places out west), but that did not seem to matter to the markets yesterday. Chinese PMI numbers were weak coming into yesterday’s trade and, with most of Europe on a May Day holiday, we saw lower prices across the board. We did see some recovery by mid-day off of the session lows, but ultimately ended up lower on the day with the beans leading the charge. July beans were down 26 cents to $13.73, while the November contract was down 14 ¼ to $12.09 ¼. July corn ended the day down 3 ¼ cents to $6.46 ¾ cents and December corn settled down 6 ¼ cents to $5.50 ½.

This morning, we look for corn to open 5 to 10 higher, beans to open 2 to 10 higher.

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