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

Yesterday was all about the spread between blocks and barrels. There were those who thought it would correct with barrels doing the work on the way up and those who thought the blocks had to head lower for most of it. Yesterday, the block fell, doing the work. The spread is still historically wide, but much more comfortable than when it was over 20 cents. Those who thought barrels could move up were wrong, and they sold futures yesterday on what they took to be bearish news.

I know I am talking cheese here, but powder needs to make another leg up for cheese to as well.

But lower prices on cheese spot and cheese and milk futures? Well, today is pivotal folks. Class III has broken below $19 in all Class III months, save for September, and this occurred yesterday on heavy trading volume. Market bulls need to see prices spring back today, and that means they need barrels to show some teeth. This price break is great for end-users, but frightening for dairy producers who have not yet gotten any option coverage. And with whey having softened yesterday as well ― in the futures market ― today is a very decisive technical front line: Will $19.00 become support or resistance for the next several weeks?

Spot session results:

Block cheese: $1.865 (down 5 cents)

Barrel cheese $1.735 (unchanged)

Grade A NFDM: $1.73 (down 1.75 cent)

Butter: $1.6375 (down 0.75 cent)

In the grain complex, planting delay talk helped grain futures recoup some of Monday’s losses. Crop estimates fell short of some estimates ― and weather, well its weather talk and it looks mostly OK with some contradictory reports filtering in. I call BS, I call ignorance, I call, I call, I call…. Much of the trade between now and Friday will be position-squaring in front of Friday’s report and reaction to new weather reports. 

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