Class III futures market continues to be mixed

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

Yesterday’s Class III action left traders with a mixed market and little in the way of longer-term direction. 2013 contracts continued down slightly, trying to work their way off of the current over-bought condition, while most 2014 contracts are putting in higher highs and continuing their upward grind.

It feels as though there is a move to flatten the forward price curve, but it may be more of a case of overall uncertainty that is leading to more of a mixed-market condition.

The Nov. 13 contract took the largest loss on the day down ― 11 cents to settle at $18.63. The July 2014 contract put in a good performance (albeit on light trading), gaining +.07 cents to settle at $17.11. Volume was better than the previous session with just shy of 1,100 contracts trading hands. The market will look out to the latter half of the week for more direction from Cold Storage and Milk Production numbers for guidance, as we have not gotten anything in terms of direction out of the spot market this week.

Spot session results:

Block cheese: $1.875 (unchanged)

Barrel cheese: $1.82 (unchanged)

Grade A NFDM:  $1.90 (unchanged)

Butter: $1.475 (unchanged)

Yesterday’s grain trade was fairly quite given the previous session’s action. Dec. 13 corn futures closed out the day up +0.0125 to settle out at $4.3200. The overnight session was mainly lower and had some follow-through early, but the market worked back to the $4.3200 resistance level to close. We saw funds come in and add 5,000 contracts to lighten up their overall short position. Soybeans also caught a bounce. The Nov. 13 contract was up +.0775 to settle at $12.7900, and we saw funds add in 3,000 contracts. This for sure is not a total turnaround, but the action may be more of a retracement of previous moves. We will watch the $4.2900 support level in corn and the $12.6800 level in beans to see if they hold in today’s trade or if we break through and start a larger sell-off.

Grains continue to bounce back this morning with corn and wheat expected to open 1 to 5 cents higher and soybeans 4 to 8 higher.

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