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

Although we saw strong gains in yesterday’s spot session with blocks up 3 ½ cents and barrels up 4, Class III and cheese futures once again came under pressure. Class III saw Dec12-June13 settle between 5 and 29 lower, even as both blocks and barrels came off their monthly lows. With blocks settling at 2.0450 and barrels at 2.0100, the spread has narrowed to the historical 3- to 5-cent range. That being said, one would have expected a rally on this news; however, said rally never materialized. So, why would this be the case ― as the market begins to look very top heavy?

Currently, several factors and mixed bits of information have fostered a skittish attitude with traders. As some sit on the sidelines thinking the market will turn over, others wait in anticipation of one more push higher, while even more ponder how long this can all last before demand weakens.

In the grain complex, December Corn settled -5 ¼, while March Corn was down 3 ¼ on a day that saw no more than a 13-cent range. Corn futures for the month of October have traded within a 45-cent range, and the choppiness continues. With most of corn harvested and export numbers looking less than stellar and  prices still high domestically relative to South America,  traders seem weary and this sideway pattern seems to be the trend, at least short-term.

Soybeans also continue to be trading in a sideways pattern thus far in October, with the high being 16.00 on Oct. 1 and the low being 14.84 on Oct. 15. That being said, Jan Beans settled up 6 ½ cents higher while Mar Beans settled up 3 cents on the day. With Jan contract highs fresh on traders’ minds, the question now is when and in which direction this market will go. Short-term, we can expect this choppiness to continue.

Look for corn to open 2 to 3 cents higher and beans to open 8 to 10 higher.

Block cheese: $2.045 (up 3.5 cents)

Barrel cheese $2.01 (up 4 cents)

Butter: $1.89 (down 1.25 cents) 

Grade A NFDM: $1.56 (unchanged)

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