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

The roller coaster continues as Class III settled mostly lower yesterday anywhere from -4 to -31 through the first half of 2013 and unchanged to +5 in the second half. 

This move, through the first half of 2013, was fueled by weakness in both blocks and barrels and compounded by weather concerns on the East Coast. As a result, Class III spiraled lower in that first half with December taking the biggest hit. December was down 31, although 15 cents off its October low of 19.82 made on Oct. 1. Although these weather concerns may have contributed to yesterday’s downside momentum, the brunt of Hurricane Sandy is yet to be seen. However, we can expect production (milk pickups) to be affected in some capacity, especially in Upstate New York.

Currently, we are still hearing that cheese is tight and demand has yet to be impacted by higher prices. With holiday orders filled, traders seem to be sitting on the sidelines waiting for market to make its move as the markets are both choppy and eerily quiet. We can expect this pattern to continue in the short-term, but don’t expect it to last too long as product from Oceania continues to look more attractive and with higher prices slowly trickling down to the consumer. 

The Crop Progress report, normally scheduled for a Monday release, was delayed due to hurricane related closures of Washington D.C. federal government offices. The rescheduled release times will be announced as soon as offices reopen. But harvest is near 90 percent complete, so we can move on without any major issues without this report for a few days. That being said, December & March Corn settled down slightly on the day, down ¾ of a cent, continuing its sideways trend. .

Soybeans saw a sharp decline with both Nov and Jan beans, settling down 34 cents on the day. Delays with South American plantings are fueling rumors that acreage may increase for beans, compound this with speculation that the USDA may raise production in the U.S., and traders were nervous accounting for some of slide lower.

We look for grains to open modestly firm.

Block cheese: $2.11 (down 1 cent)

Barrel cheese $2.05 (down 3 cents)

Butter: $1.89 (unchanged) 

Grade A NFDM: $1.56 (unchanged)

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