Tuesday Closing Dairy Market Update - Global Dairy Trade Declines 0.3%

MILK

Both categories of cheese finally moved higher in tandem. This triggered the buying of milk futures, as some traders wanted to get out of their positions, while others wanted to buy into the market, thinking the bottom might be in. It will take further gains to increase the confidence of traders that prices may trend higher. The Global Dairy Trade Auction trade-weighted average price slipped 0.3% on Tuesday's event. The average price was $3,852 per metric ton with 38,956 metric tons sold. There were 169 bidders taking part in the event. Anhydrous milk fat increased 0.3% from the previous event, totaling $47,229 per metric ton, or $3.28 per pound. Butter slipped 0.3% to $6,495 per metric ton, or $2.95 per pound. Cheddar cheese increased by 4.2% to $4,702 per metric ton, or $2.13 per pound. Lactose decreased 5.8% to $985 per metric ton, or $0.41 per pound. Skim milk powder decreased by 1.8% to $2,745 per metric ton, or $1.25 per pound. Whole milk powder remained unchanged at $3,553 per metric ton, or $1.61 per pound. Mozzarella cheese fell 8.2%, totaling $4,559 per metric ton, or $2.07 per pound.

AVERAGE CLASS III PRICES

3 Month:	$21.50
6 Month:	$20.71
9 Month:	$20.25
12 Month:	$20.04

CHEESE

Tuesday's strength may cause sellers to step back to see how aggressive buyers will be. Hopefully, buyers will attempt to purchase cheese to take advantage of the lower prices and will leapfrog over each other to purchase before the prices rise too far. That would increase the buying interest in futures contracts. Holiday demand should improve over the next month, providing further support to the market.

BUTTER

Butter manufacturers have too much butter and are moving it to the market as soon as possible. There have been 79 loads of butter traded on the spot market this week. Buyers have been able to increase their supplies without having to chase the market. This is expected to limit the upside price potential, as buyers have plentiful supplies available, eliminating the need to be aggressive.

OUTSIDE MARKETS SUMMARY

December corn closed down 7 cents per bushel at $4.0125, November soybeans closed down 5 cents at $9.9100 and December soybean meal closed down $3.50 per ton at $311.80. December Chicago wheat closed down 5.75 cents at $5.7950. December live cattle closed down $1.40 at $186.53. November crude oil is down $3.25 per barrel at $70.58. The Dow Jones Industrial Average is down 325 points at 42,740, with the NASDAQ down 187 points at 18,316.

Tuesday Midday Dairy Market Summary - Cheese Prices Bounce

OUTSIDE MARKETS SUMMARY:

CORN:	7 Lower
SOYBEANS:	5 Lower
SOYBEAN MEAL:	$3.60 Lower
LIVE CATTLE:	$1.65 Lower
DOW JONES:	215 Points Lower
NASDAQ:	172 Points Lower
CRUDE OIL:	$3.44 Lower

MIDDAY MARKET UPDATE:

Cheese prices finally showed good strength in both categories as buyers became more aggressive. The block cheese price gained 5.75 cents closing at $1.9375 with two loads traded. The barrel cheese price gained 4.50 cents closing at $1.89 with two loads traded. An unfilled bid for a load of blocks remained at the close. Hopefully, buyers will hold back to see if buyers will be more aggressive and want to take advantage of the lower prices. If that is the case, prices could move higher for a time. The dry whey price increased by 0.25 cents closing at 59.75 cents with three loads traded. Class III futures are 2 to 39 cents higher with November and December showing the greatest gains. The butter price closed unchanged after initially gaining 1.50 cents. The prices closed at $1.6150 with 46 loads traded. The volume of loads coming to the market keeps the butter price from increasing. Nonfat dry milk declined 0.50 cents closing at $1.35 with two loads traded. Class IV futures have not yet been traded. Butter futures are steady to 3.50 cents higher. Dry whey futures are 1.22 cents lower to 1.00 cents higher. The Global Dairy Trade auction showed a decline of 0.3%.

Tuesday Morning Dairy Market Update - Prices Search for Support

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	2 to 3 Lower
Soybean Futures:	7 to 9 Lower
Soybean Meal Futures:	$2 to $3 Lower
Wheat Futures:	3 to 5 Lower

MILK:

Milk futures will struggle if underlying cash cannot find support. The buyers of cheese and butter continue to anticipate further cash weakness holding back and buying on the weakness. Supplies are sufficient leaving buyers unconcerned over supply through the holiday season. Bottlers and manufacturers have sufficient milk available for needs. The attitude of the market is bearish keeping milk futures under pressure. Milk components are higher than usual for this time of year improving cheese yield and cream supplies. The market is balanced at the current price levels. However, the market never remains comfortable for very long and either the bearishness will increase, or traders will turn bullish for the long-term depending on any change in market fundamentals.

CHEESE:

The unfilled bids remaining for barrel cheese at the close of spot trading on Monday, provided hope that the market may be near support. There does not appear to be a price void above the market or that would have been uncovered. The current block and barrel prices seem to be in line with demand.

BUTTER:

The more loads of butter traded at lower prices, there is less of a chance for a price rebound. Buyers have purchased substantial supplies on the spot market without being aggressive. The more that is purchased now, the less there is that needs to be purchased later. This may leave the market with limited upside price potential for the foreseeable future.