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

The dairy market saw signs of life yesterday after a week or so of volume numbers that more closely resembled a holiday period rather than the second week of a new fiscal year.

After nine consecutive sessions of the blocks holding steady, we finally saw movement with blocks down 9 cents on the day. Barrels were also down 9 cents to close below $2.00 for the first time in nearly a month. Although we did see movement, after nine consecutive days of complacency it’s important to note that this move in blocks was on one trade, and a one-day movement is not indicative of a trend. 

That being said, as one could imagine this move did help fuel a downward spiral in Class III futures with futures trading anywhere from +5 to -73. The November contract took the biggest hit and settled at levels not seen in a month. 2013 contracts outside of January, however, did not suffer to nearly the extent that November and December did. Jan was down 29, but other months were -6 to +4.

From a fundamental prospective, there has been little new news. Tightness in California remains, production of cheddar has increased both year over/month over, inventories are still adequate, exports have slowed, but product is still moving and the result….. a mixed picture. 

It was a mixed trade for the grain markets yesterday. Corn was up a penny to 738.25, soybeans up 1.25 to 1493.75, and wheat down ½ a cent at 847.75.

This morning, we look for corn to open 1 to 4 higher and for beans to open steady to 10 higher.

Block cheese: $2.01 (down 9 cents)

Barrel cheese $1.97 (down 9 cents)

Butter: $1.875 (down 5.5 cents) 

Grade A NFDM: $1.60 (unchanged)

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