Block cheese unchanged on CME

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

Following the March milk production report and last week’s late selling pressure, steady to lower offers were seen early across Monday’s Class III market.

Cash cheese markets also confirmed that trend with blocks settling unchanged on 1 trade and barrels down ½ cent on an offer only. Yet, as the day went by, even with selling pressure in Class IV, most deferred Class III contracts managed a turnaround to the upside. The front-month May contract still settled 19 cents lower on the close to $18.92 per cwt.; the June through October contracts, however, settled 3 to 19 cents firmer. The April through December 2013 average finished 4 cents higher to $18.93.

The 3rd quarter of 2013 currently averages $19.46 per cwt., +17 cents from last Friday’s close. The gains were impressive, considering losses witnessed yesterday in the 3rd quarter Class IV futures (down 20 cents). Class III futures have received most of their optimism from gains in both NFDM and butter markets in recent weeks. If today’s action in Class IV markets becomes more than a one-day selloff, weakness in Class III should also be expected to follow suit.

Spot session results:

Block cheese: $1.88 (unchanged)

Barrel cheese $1.765 (down 0.5 cent)

Grade A NFDM: $1.785 (unchanged)

Butter: $1.77 (down 1.75 cent)

It was a relatively quiet opening to the week for the grain markets as overnight pressure was seen due to a drier weather window likely to allow planting in the coming weeks ― and that pressure was maintained throughout the day session which traded a tight range. By the close, May corn was down 6.25 cents to 645.75; December was down 14 cents to 533, while May beans fell 11 cents to 1417.25 and Nov beans were down 10.25 cents to 1202.75.

After the close, corn planting progress was announced at just 4 percent completed which was mostly in line with expectations, but trails last year by 22 percent. The market will continue to closely monitor planting progress for the coming weeks and could see some additional downside should we see the crop get in the ground quickly.

We look for corn to open 1 to 5 cents lower and beans to open mixed -2 to +5.

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