Friday Closing Dairy Market Update - Butter Production Higher

GENERAL OVERVIEW:

USDA released the Dairy Products report Thursday for September, however due to a USDA website error, we didn't get to see the results until Friday morning. Cheese production is down month over month, while higher than last year. Butter production, on the other hand, was up significantly from the previous month and the previous year.

MILK:

Class III futures settled 2 cents higher today on the November contract at $17.70. That is down 30 cents from Monday. Class IV futures did not trade on the November or December contract today, however the January contract was down 48 cents Friday afternoon. While Class IV was not very active for the week, futures were supported from strength in the Nonfat Dry Milk (NDM) market. NDM had a strong week, continuing strength from the end of the week last week. Futures had traded within 3 cents of contract highs before falling apart today. On the September Dairy Products report, regular hard ice cream production totaled 62.4 million gallons, up 5.6% from last year.

AVERAGE CLASS III PRICES:

3 Month:	$17.00
6 Month:	$16.97
9 Month:	$17.11
12 Month:	$17.27

CHEESE:

For the week, blocks fell 3.25 cents with 13 loads traded. The weekly average price is $1.5820, down 12.75 cents from last week's average. Barrels declined 2.5 cents with no loads traded. The weekly average price is $1.72, down 0.30 cents from last week. Dry whey ended the week unchanged after trading higher midweek. There were no loads that traded. The weekly average price is 84.6 cents, an increase of 1.50 cents from last week. On the September Dairy Products report, total cheese output was 1.23 billion pounds, up 0.7% from last year and down 2.5% from the previous month. Dry Whey products totaled 71.7 million pounds, up 3.8% from last year.

BUTTER:

For the week, butter fell 6.75 cents with 40 loads traded. The weekly average price is $1.2895, down 2.5 cents from last week. Grade A nonfat dry milk increased by 7.25 cents, with nine loads traded. The weekly average price is $2.1765, up 10.45 cents from last week's average. On the Dairy Products report, total butter production was 204 million pounds, 10.9% above last year and 8.9% above August. Nonfat dry milk production was 129 million pounds, which was up 3.7% from last year. Skim milk powder production was 19.1 million pounds, down 58.8% from last year.

OUTSIDE MARKETS SUMMARY:

December corn closed up 1.50 cents per bushel at $4.4150, January soybeans closed up 5.50 cents at $11.9375 and December soybean meal closed up $2.00 per ton at $319.20. December Chicago wheat closed down 8.00 cents at $5.9125.

December live cattle closed down $0.35 at $214.05. December crude oil is down $0.11 per barrel at $90.41. The Dow Jones Industrial Average is down 237 points at 51,285 and the NASDAQ is up 264 points at 24,579.

Friday Midday Dairy Market Summary - Spot Markets Lower

OUTSIDE MARKETS SUMMARY:

CORN:	1 Higher
SOYBEANS:	2 Lower
SOYBEAN MEAL:	$0.10 Lower
LIVE CATTLE:	$1.15 Lower
DOW JONES:	31 Points Higher
NASDAQ:	385 Points Higher
CRUDE OIL:	$0.24 Lower

MIDDAY MARKET UPDATE:

The block cheese price decreased by 1 cent to close at $1.5675 with 3 loads traded. The barrel cheese price was 2.5 cents lower to close at $1.70 with no loads traded. Dry whey decreased 2 cents to close at 84.0 cents with no loads traded. Class III futures are trading 2 to 11 cents higher. The butter price decreased by 0.75 cents, closing at $1.2650 with 1 load traded. There were 11 bids and 14 offers remaining at the close. Grade A nonfat dry milk decreased 1.5 cents to close at $2.1975 with 1 load traded. Class IV futures have not yet been traded. Butter futures are mixed trading from 0.275 cents lower to 0.5 cents higher. Dry whey futures are 0.10 to 0.55 cents lower. Cheese futures are 0.5 cents lower to 0.9 cents higher. Nonfat dry milk futures are 0.475 to 3.92 cents lower

Friday Morning Dairy Market Update - Volatile Week for the Market

OPENING CALLS:

Class III Milk Futures:	1 to 10 Higher
Class IV Milk Futures:	1 to 10 Higher
Butter Futures:	0.50 to 1.50 Lower

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 2 Lower
Soybean Futures:	1 to 3 Lower
Soybean Meal Futures:	$2.00 to $2.50 Higher
Wheat Futures:	7 to 9 Lower

MILK:

Dairy markets are quiet Friday morning as there has been very limited trading overnight. Class III milk futures are unchanged to up 1 cent. Class IV has not yet traded. Nonfat dry milk (NDM) is only pennies away from contract highs. Can they close the week off strong? NDM futures have not yet traded Friday morning. Milk supplies across the country are currently tight in the East, Central and Upper Midwest, while they are described as heavy in the West. Milk production is expected to increase this month as cooler temperatures improve cow comfort.

CHEESE:

Cheese futures are down 0.2 cents in the nearby contracts as the deferred contracts have not yet been traded. The spot market has weakened this week with the current weekly average for cheddar blocks trading 12 cents below last week's average with only Friday's trade left to go. Barrels have not traded this week. Grocery stores are pushing advertisements and sales for cheese, trying to encourage the consumers to add cheese and butter products to their shopping carts.

BUTTER:

Butter futures have not yet been traded Friday, but are expected to continue to be pressured until demand increases. The grocery stores are doing everything they can to encourage the baking season to get started. The Cold Storage report last month did show that butter stocks are down from the previous month. However with an increase of 16% from the previous year at this time, it is difficult to gain much ground.