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

Yesterday was noise in the dairy markets as prices moved up. There’s not much if anything to read into it other than profit taking. In these times of large price movement, it’s important to focus on the big picture.

International prices seem to have about bottomed out, and it will take months to begin an upward curve. There will be bounces, but cheese, whey and Class III still have more room to the downside. We anticipate domestic pipeline filling to come in earnest in late January and into February. The export levels of 2014 are not within reach again for the foreseeable future.

NFDM led the move lower in U.S. dairy products, as it should have. Because it started the race first, it has finished it first. Is there more room to the downside? Maybe, but not much.

 

Jan. 7 spot session results:

Block cheese: $1.5700 (unchanged)

Barrel cheese: $1.5450 (up 0.5¢)

Grade A NFDM: $1.0000 (unchanged)

Butter: $1.5400 (unchanged)

 

Today's expectations:

• Class III, Cheese & Dry Whey futures to open (irrelevantly) higher

• Class IV, Butter & NFDM futures to open steady to higher

 

Grain futures

Prices fell back yesterday in the entire grain complex. Corn got popped on rising production expectations, falling ethanol output and continually falling oil prices. This pulled beans down, which in turn pulled meal down.  Though our medium-term bias was bullish on corn, I thought that we’d see March pop temporarily toward $4.50/bushel, but having broken down below $4 again, that looks increasingly unlikely, even on a temporary basis. With prices tepidly higher overnight, watch out for the close to see if buying sustains anything back above $4.

USDA releases annual Crop Production and quarterly Grain Stocks reports on Jan. 12.

 

Today’s expectation:

• Corn and soybean futures to open higher; soybean meal to open lightly mixed

 

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