Thursday Morning Dairy Market Update - Class III Futures Show Little Upside Potential

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	2 to 5 Higher
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	Steady to 1 Lower
Soybean Futures:	2 to 3 Higher
Soybean Meal Futures:	$5 to $7 Higher
Wheat Futures:	6 to 7 Lower

MILK:

Class III milk futures continue to struggle to find support as spot cheese and butter prices continue to flounder. Without the support of the underlying cash, there is little reason for futures to increase. Milk production is improving seasonally, with more milk available due to substantially higher cow numbers. There is an anticipation that dairy cattle culling will increase due to low milk prices, but that does not seem to be the sentiment in the country. Extra manufacturing plant capacity is being filled by farms desiring to increase cow numbers. It does not appear that the seasonal price strength will materialize. Supply remains higher than demand.

CHEESE:

Cheese prices may either develop a price range or revisit the lows last seen in June. The downtrend in the block cheese price that began in mid-August remains intact. Buyers are obtaining sufficient supplies in the country and remain unaggressive in the daily spot market.

BUTTER:

There is little anticipation of a price increase anytime soon. A large volume of loads remains at the close of spot trading each day despite the good volume of trading on the spot market. Current demand is not able to reduce the supply and tighten the market.

Wednesday Closing Dairy Market Update - Light Trading Activity Was the Order of the Day

GENERAL OVERVIEW:

Class III milk futures were mostly lower, with traders seeing limited volatility. Trading volume was light. Class IV futures only showed trading activity in the January contract.

MILK:

Milk futures closed about as expected, with Class III mostly lower and Class IV higher. Milk volumes are increasing in much of the country as weather has become cooler. Corn silage harvest is either complete or ongoing, with many indicating good tonnage. There has been little indication of any slowing of milk production due to an increase in culling. The milk production and livestock slaughter report will provide a good indication of the direction of the market for the rest of the year. The anticipation is that the increase in cow numbers will slow as low milk prices may increase the culling of lower producers and reduce the desire to pay higher prices for replacements. However, it may take some time before that will be evident, much less tightening the milk supply.

AVERAGE CLASS III PRICES:

3 Month:	$16.04
6 Month:	$16.31
9 Month:	$16.60
12 Month:	$16.82

CHEESE:

The milk supply has reportedly tightened somewhat this week. However, it has not had much impact on spot milk prices. Spot milk is flat to $2.00 over class, which is lower than usual during this time of year. Manufacturing plants are running on full schedules. Spot cheese is readily available, leaving buyers unaggressive in the market.

BUTTER:

Butter production is steady to higher as ice cream production winds down and more cream is available to the market. Domestic butter supplies are ample for demand. Many butter plants are now running on six-day weeks.

OUTSIDE MARKETS SUMMARY:

December corn closed down 1.50 cents per bushel at $5.3425, November soybeans closed up 1.75 cents at $13.2050, and December soybean meal closed up $.20 per ton at $365.60. December Chicago wheat closed up 2.25 cents at $7.3075. December live cattle closed down $3.15 at $220.20. October crude oil is down $3.76 per barrel at $102.07. The Dow Jones Industrial Average is down 631 points at 51,462, with the NASDAQ down 3 points at 25,978.

Wednesday Midday Dairy Market Summary - Milk Futures Continue to Struggle

OUTSIDE MARKETS SUMMARY:

CORN:	6 Lower
SOYBEANS:	5 Lower
SOYBEAN MEAL:	$1.40 Lower
LIVE CATTLE:	$0.85 Lower
DOW JONES:	29 Points Lower
NASDAQ:	171 Points Lower
CRUDE OIL:	$3.12 Lower

MIDDAY MARKET UPDATE:

The block cheese price slipped 0.25 cent to close at $1.4325 with 4 loads traded. The barrel price increased 1.25 cents to close at $1.4525 with one load traded. The gain in barrels did not offset the decline in blocks because barrels are not part of the calculation in the Class III price. The dry whey price remained unchanged at 76.25 with no loads traded. Class III futures are 19 cents lower to 1 cent higher with the September contract the only one showing a gain. The butter price remained steady at $1.3550 with 21 loads traded. Then price initially declined 0.75 cents before regaining the loss. There were 12 unfilled bids and 45 uncovered offers remaining at the close. Grade A nonfat dry milk increased 1.50 cents to close at $2.05 with 5 loads traded. Class IV futures have not yet traded. Butter futures are 3.00 cents lower to 2.25 cents higher. Dry whey futures have not traded. Cheese futures are steady to 1.00 cent lower. Nonfat dry milk futures are 0.77 cent lower to 1.32 cents higher.