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

Class III futures saw a continued light volume trade Thursday as we barely eclipsed the 800 contract mark, but that’s not to say it wasn’t interesting ― or perhaps perplexing is a better word. Futures opened the morning quietly with prices mostly unchanged and then snapped higher just prior to the spot session which saw blocks fall by a penny to 1.6350 ― now just ½ a cent above the barrel market which was trading over a 10-cent differential just a few weeks ago.

The timing of the rally seems to take the thought of a bullish milk report having a big influence; rather, the market seemed to shake off the drop in spot prices mostly due to being technically oversold. Whatever the case may have been, nearby months saw the largest gains with March through May 17 to 18 cents higher while June through Dec finished up 2 to 8 cents.

Spot session results:

Block cheese: $1.635 (down 1 cent)

Barrel cheese $1.63 (unchanged)

Grade A NFDM: $1.505 (unchanged)

Butter: $1.600 (down 0.5 cent)

It was a busy news day for the grains with the big snowstorm pounding the plains and Midwest while the Ag Outlook Forum was taking place. The Ag Forum estimates will be released tomorrow, but for the most part production estimates were in line with expectation and project for a sharply lower corn price this fall.

Corn was under pressure from the Ag Forum, as well as the domestic precip, from the onset and ultimately settled down 9.75 cents at 690.75. Wheat prices continue to come under sharp pressure dropping by 17.25 cents to 721.25, while the soybean market continues to see backwardation increasing. March beans were 5 cents higher on the day to 1487.75, while November beans dropped by 10 cents to 1277.

This morning, we look for corn to open 1 to 4 cents higher, beans to open 15 to 22 higher.

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