Tuesday Closing Dairy Market Update - Milk Futures Showed Little Direction

GENERAL OVERVIEW:

Class III futures found greater strength through the end of the day, with some contracts posting double-digit gains. Today was the last day to trade November contracts, with the Federal Order prices to be announced on Wednesday.

MILK:

Class III milk futures were higher into the close despite further weakness in the spot cheese prices. The hope is that prices may have found a bottom, but there is no solid evidence of that currently. The time of year makes it difficult for prices to show much upside price potential, as most of the holiday season buying has been finished. Fill-in orders will continue to be met and may trigger more aggressive buying for a short period. The November Federal Order class prices will be announced on Wednesday. The trade estimates a Class III price of $17.16 and a Class IV price of $13.83.

AVERAGE CLASS III PRICES:

3 Month:	$15.61
6 Month:	$15.88
9 Month:	$16.26
12 Month:	$16.56

CHEESE:

Both blocks and barrels made new lows for the year as prices are unable to find a bottom. The continued weakness moving toward the end of the year does not bode well for early next year when demand is seasonally slower. Cheese production is heavy with plants wanting to move products quickly, even at lower prices, to keep from building up supplies at the plant level.

BUTTER:

The butter price may have moved into a holding pattern for the time being, as retail demand has improved for the holiday season. Churns are running seven days a week to process the available cream. This keeps a sufficient supply readily available for demand. We will not know inventory levels until Dec. 23, when USDA releases the cold storage reports that will hopefully bring the information up to date.

OUTSIDE MARKETS SUMMARY:

March corn closed up 5.00 cents per bushel at $4.5000, January soybeans closed down 3.25 cents at $11.2475 and January soybean meal closed down $3.00 per ton at $311.60. March Chicago wheat closed up 6.00 cents at $5.4100. February live cattle closed up $4.88 at $220.80. January crude oil is down $0.71 per barrel at $58.61. The Dow Jones Industrial Average is up 185 points at 47,474, with the NASDAQ up 138 points at 23,414.

Tuesday Midday Dairy Market Summary - Block Cheese Makes a New Low

OUTSIDE MARKETS SUMMARY:

CORN:	4 Higher
SOYBEANS:	3 Lower
SOYBEAN MEAL:	$2.00 Lower
LIVE CATTLE:	$4.12 Higher
DOW JONES:	49 Points Higher
NASDAQ:	110 Points Higher
CRUDE OIL:	$0.27 Lower

MIDDAY MARKET UPDATE:

The block cheese price declined 0.75 cent, closing at $1.4350, and a new low for the year, with seven loads traded. The barrel cheese price declined 2.00 cents, closing at $1.50 with no loads traded. The dry whey price slipped 0.25 cent to close at 73.00 cents with two loads traded. Class III futures are 8 cents lower to 7 cents higher. The butter price gained 1.50 cents, closing at $1.46 with seven loads traded. Grade A nonfat dry milk gained 0.50 cent to close at $1.1450 with seven loads traded. Class IV futures have not yet been traded. Butter futures are 0.02 to 2.72 cents higher. Dry whey futures are 0.50 to 1.02 cents higher. Cheese futures are 0.60 cent lower to 0.30 cent higher. Today was the final trading day for November futures and options, with the Federal Order prices being announced on Wednesday.

Tuesday Morning Dairy Market Update - Prices May Remain Under Pressure

OPENING CALLS:

Class III Milk Futures:	4 to 6 Higher
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

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

MILK:

Class III futures have developed a slight uptrend in nearby contracts, but continue to see pressure in later contracts. The inability of spot prices and futures prices to trend higher during this time of year does not bode well for prices for the rest of the year and the typically slower demand period early in the year. There is positive demand news, but the increase in demand is not enough to tighten supplies and raise prices. End users see sufficient supplies, leaving them confident to purchase on an as-needed basis. Milk production remains strong and is expected to remain that way even as culling increases. Tuesday is the last day to trade November futures and options with the Federal Order prices announced on Wednesday.

CHEESE:

The block cheese price has been unable to find support. Manufacturers are willing to move supplies at lower prices to avoid building plant inventories. Buyers have been content to wait for lower prices to purchase supplies for demand.

BUTTER:

The butter price is closely aligned with the block cheese price. Butter is struggling to find support even though domestic demand has improved. Lower prices and the holiday season have increased buying interest, but it has not been sufficient to tighten the supply.