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

Roses are red, violets are blue and on this Valentine’s Day we want to remind you that we love you.

Yellow cheddar cheese exploded higher in the spot market yesterday, as both blocks and barrels gained. The core theme was the shrinking of the spread. Blocks had shown for some time now that they were not willing to fall and, thus, barrels had to do the hard work rallying in excess of the block move; the spread is now at 4 ½ cents ― in line with the historical norm of 3 to 5 cents, but it might not yet be completely done shrinking, as we might very well find it around 2 to 3 cents in the coming days.

Despite the big move up in spot cheese prices, milk and cheese futures did not hold on to gains. Briefly, futures exploded upward with milk just over a 20-cent gainer. But ultimately selling pressure came in and cheese futures closed only modestly higher, while Class III milk futures were mostly higher by only a couple cents and even traded lower in the after-hours market.

Spot session results:

Block cheese: $1.675 (up 1.5 cent)

Barrel cheese $1.63 (up 5 cents)

Grade A NFDM: $1.5125 (unchanged)

Butter: $1.5875 (up 3.25 cents)

Up, down and all around we went yesterday in the grain markets. Old/new crop spread unwinds are still strongly present amid a great weather debate of currently ample global rains. Early yesterday, the grains were under strong pressure and seemed perhaps a bit doomed to slip/slide away, but a reprieve of technical buying allowed some support to be found. Old crop corn ultimately closed a tad lower – ¾ to $6.95 ½ concluding with its 9th consecutive lower close; folks, it’s time for at least a dead cat bounce here…that has not happened since 1980. New crop corn, however, closed higher again amid spread unwinds, as Dec13 corn settled at +1 ¼ to $5.83. Flat price is once again becoming attractive to end users and buying should materialize, even if only a brief spurt, from end users here. We seem likely to pop back over $7 March corn, even if only for a brief stint above that water mark.

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