Class III futures extend their losses on CME

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

How low can you go? This was yesterday’s question for both the Class III futures and the spot market.

Class III futures extended their downside losses amid good volume of just under 1,600 contracts. Most of the action was in the June and July contracts with those markets dropping by -32 and -35 cents, respectively. Most of the damage was done pre-spot, but futures did work toward and set their lows after the session saw the blocks fell by 4.25 cents, while the barrels remained unchanged. It was surprising to see the bears maintain control of the futures market, despite the blocks closing a ¼ cent off the low with a bid left on the board. Remaining Class III contracts finished the day 3 to 12 lower all the way out through March 2014.

Spot session results:

Block cheese: $1.8025 (down 4.25 cent)

Barrel cheese $1.7225 (unchanged)

Grade A NFDM: $1.70 (unchanged)

Butter: $1.61 (unchanged)

We saw a resurgence in the grain markets yesterday ahead of the plantings progress report with a forecast for rain from mid-week into the weekend causing more delays and pushing us to an up day in the grains.

Not to sound like a broken record, but we are getting down to the wire here for planting and the market has become rather volatile over the past few sessions with seemingly each day a double-digit reversal of the previous day’s activity, but ultimately prices little changed. Farmers are going to have to squeeze every dry day they can to get the crop in on time. And they’ll get a few more days early next week, according to the long term forecasts.

July futures were the big mover, closing out at 655 ½ up 19 ¼ cents on the day as basis continues to surge higher while the Dec. contract settled at 539 ¼ up 9 ¾ cents. Beans followed suit in the July contract, closing at 1419 ¼ up 20 ¼ cents on the day, while the November contract was only up 4 ¼ cents at 1209 ¾. It was a buy corn/sell beans day for new crop contracts due to the planting delays. After the close, corn planting progress was reported at 28 percent completed ― right in line with expectations ― while soybeans were 6 percent planted, slightly behind expectations for 10 percent.  

This morning, we look for corn to open steady to 4 cents higher and beans to open 4 to 8 stronger.

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