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

Cheese hikes higher still as futures are amidst the stench of short covering….

We’ve been bullish this thing for some time; we remain focused on the global trend of higher milk production coupled with higher milk prices on the heels of Asian demand. Yes, we have to worry about the Fed and potentially higher U.S. dollar valuations, but that’s uncertain and farther down the road. The here and now is strong U.S. exports providing a bullish push, and worrisome for end-users while opportunistic for producers.

Fact is, with the forward curve down from front months and relatively flat for much of 2014, there is opportunity for all sides of this market today.

Will China buying dry up? Will China figure out how to stem the losses in domestic milk production? Maybe and yes, eventually. When is a poor man’s guessing game and we are focused on margin opportunities more so than anything.

Spot session results:

Block cheese: $1.92 (up 4 cents)

Barrel cheese: $1.8125 (up 3.5 cents)

Grade A NFDM:  $2.0175 (1.75 cent)

Butter: $1.64 (unchanged)

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