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

It was an up and down day for Class III futures Tuesday as prices started the morning lower, traded higher during spot then moved lower post spot only to finish the session with a buying flurry and settle mixed.

From March through Dec, prices were anywhere from 7 higher in March to 12 lower in December. Volume was very heavy on the day reaching 1,848 contracts with each month from Feb through November trading at least 79 contracts. Things were soft on follow-through selling early in the session and looked as though the bottom may fall out when spot prices fell; however, buyers brought the block off its low and prices turned more mixed to close out the day. Blocks finished at $1.6025, down ½ a cent with a low of $1.5975, while barrels were down 2 at $1.5800.

The bearish sentiment of late in the physical market seems to be gaining steam early this week, but the spot buyers were able to stem that from falling over into the futures prices.

Spot session results:

Block cheese: $1.6025 (down 0.5 cent)

Barrel cheese $1.58 (down 2 cents)

Grade A NFDM: $1.4975 (down 0.75 cent)

Butter: $1.55 (down 2 cents)

What can’t go down…must go up??? Corn futures have been hovering just above support. And as the nearby spreads have backwardated and basis values have rebounded, futures were unable to push to new lows. Yesterday brought in heavy fund buying to push March corn up 11.5 cents to 705, while Dec corn climbed 6 cents to 556.25. Soybeans languished, moving slightly lower as palm oil prices dropped rather sharply with March finishing down 3.5 cents to 1447.75, while new crop beans were under further pressure, -7.75 cents to 1257.75, as the South American weather situation seems to have stabilized the crops there with continued moderate rains for Argentina.

We look for corn to open mixed and beans to open 4 to 8 higher.

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