Monday Closing Dairy Market Update - Butter Inventory Declines Substantially

MILK:

Trading volume in milk futures was light with only the January and February contracts showing a few hundred contracts trading in each with only contracts showing substantially less volume. Class III futures were steady to lower through the August contract with minor gains in fourth quarter contracts. Class IV futures showed activity only in the July contract. It is a holiday week with reduced trading hours. The market will be open until 12:05 Central time on Tuesday and closed on Wednesday for Christmas. Trading activity is likely to be even lighter on Tuesday. Lighter trade could cause increased volatility if underlying cash prices showed significant movement up or down. The buyers of cheese and butter have not reacted much to lower milk production in November. They are purchasing based on needs for the first quarter of 2025 and do not see the need to be aggressive.

AVERAGE CLASS III PRICES:

3 Month:	$19.33
6 Month:	$19.33
9 Month:	$19.20
12 Month:	$19.07

CHEESE:

USDA released the November Cold Storage report which showed a decrease in inventory in all categories. American cheese inventory declined 7.9 million pounds totaling 766.6 million pounds. This is 8% below November 2023. Swiss cheese inventory declined by 489,000 pounds from October totaling 23.7 million pounds. This is 13% higher than a year ago. Other cheese inventory declined 5.7%, totaling 544.4 million pounds. This is 7% below a year ago. Total cheese inventory totaled 1.335 billion pounds, down 13.0 million pounds from October and 7% below a year ago.

BUTTER:

Butter inventory declined by 54.2 million pounds in November with supply ending at 213.5 million pounds. This is a large one-month decline and the largest November decline since 2021. Inventory is slightly higher than a year ago, putting butter in a not-as-bearish position as it had been for some time. Butter inventory has not been increasing as some reports had suggested indicating exceptional demand moving to the holidays. Increased butter production has been readily absorbed, which should support the market.

OUTSIDE MARKETS SUMMARY:

March corn closed up 1.50 cents per bushel at $4.4775, January soybeans closed down 5.00 cents at $9.6950 and March soybean meal closed down $4.20 per ton at $298.00. March Chicago wheat closed up 7.50 cents at $5.4050. February live cattle closed down $0.95 at $187.45. February crude oil is up $0.15 per barrel at $69.61. The Dow Jones Industrial Average is up 67 points at 42,907 with the NASDAQ up 192 points at 19,765.

Monday Midday Dairy Market Summary - Spot Trading Shows Limited Direction

OUTSIDE MARKETS SUMMARY:

CORN:	1 Higher
SOYBEANS:	4 Lower
SOYBEAN MEAL:	$3.50 Lower
LIVE CATTLE:	$0.47 Lower
DOW JONES:	40 Points Lower
NASDAQ:	141 Points Higher
CRUDE OIL:	$0.37 Lower

MIDDAY MARKET UPDATE:

The block cheese price remained unchanged at $1.8525 with no loads traded. The barrel cheese price declined 0.75 cent closing at $1.7525 with no loads traded. Offers for one load of blocks and three loads of barrels remained at the close with no buyers showing up to do any business. This added to the negativity of the market. The dry whey price remained unchanged at 74 cents with one load traded. Class III futures are steady to 9 cents lower. The butter price declined 0.75 cent closing at $2.5475 with nine loads traded. There were two unfilled bids and seven uncovered offers remaining at the close. Nonfat dry milk remained unchanged at $1.3925 with three loads traded. Class IV futures have not yet been traded. Butter futures are steady to 2.77 cents lower. Dry whey futures are steady to 1.25 cents lower. The USDA will release the November Cold Storage report Monday afternoon. Inventory is expected to show a decline with cheese stocks below a year ago and butter above a year ago.

Monday Morning Dairy Market Update - Light Dairy Trading Activity Ahead of Cash

OPENING CALLS:

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

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 2 Higher
Soybean Futures:	2 to 4 Higher
Soybean Meal Futures:	$1 to $2 Higher
Wheat Futures:	4 to 5 Higher

MILK:

The strength of milk futures on Friday did not carry over through overnight trading and is not expected to continue Monday unless underlying cash prices show strength. Any buying in the cash market this week will be for regular demand as buyers look ahead to next year. Holiday buying has been finished with overall demand not as good as had been expected. Milk prices may see support if production continues to decline similar to what took place in November. Milk production is steady to higher in most areas of the country from previous weeks, but lower than a year ago in some areas. The USDA will release the November Cold Storage report Monday afternoon.

CHEESE:

Cheese prices have been holding recently with prices likely having reached the upper threshold for the time being. Buyers are not expected to be aggressive this week as they assess holiday demand. Manufacturing will increase as more milk is available to the market as schools are closed.

BUTTER:

Monday's Cold Storage report is expected to show demand was good in November. There have been reports that inventory is building, but that may not be reflected on this report, but on the December report. Inventory is expected to show a decrease from October but higher than a year ago. Buyers may not be aggressive at the current price and may hold back on purchasing through the end of the year.