Thursday Closing Dairy Market Update - Traders Have Turned Optimistic

MILK

November and December Class III futures moved near the mid-$21.00 range after falling back from that level on Friday. There is a strong potential for further gains on Friday as there were quite a few unfilled bids that remained at the close of spot trading for butter and barrel cheese. At the worst, the market may move in a sideways pattern for a time. More aggressive buying interest in cheese and butter would further support milk futures. However, traders will be cautious as the upside price potential may be limited due to available supplies. California continues to struggle with increasing cases of bird flu in dairy cattle. It is uncertain how the impact it will have on milk supply and milk prices. High temperatures are likely to have a greater impact on milk production. The cattle infected with bird flu may have a greater risk of dying due to the flu virus combined with the hot weather. The virus itself usually does not kill the cows.

AVERAGE CLASS III PRICES

3 Month:	$21.88
6 Month:	$21.10
9 Month:	$20.56
12 Month:	$20.28

CHEESE

Some reports indicate retail demand is improving but not enough to generate any real excitement over supplies. Cheese demand should improve but cheese availability may keep prices from moving much higher unless both production and supplies tighten. The strong increase in the barrel cheese price today and the number of unfilled bids remaining at the close suggests further upside potential for the barrel price on Friday. The hope is for blocks to follow barrels providing support to the market.

BUTTER

It is a testament to good demand that the butter price has increased in the past two days despite the heavy volume of butter offered on the spot market. Butter manufacturing is strong with plentiful cream supplies. The cold storage report next week is expected to show significantly higher inventory than a year ago. The upside potential of the butter price may be limited.

OUTSIDE MARKETS SUMMARY

December corn closed up 2.00 cents per bushel at $4.0675, November soybeans closed up 8.75 cents at $9.8875 and December soybean meal closed up $4.40 per ton at $318.10. December Chicago wheat closed up 4.50 cents at $5.8950. December live cattle closed down $0.43 at $186.18. November crude oil is up $0.32 per barrel at $70.71. The Dow Jones Industrial Average is up 161 points at 43,239 with the NASDAQ up 7 points at 18,374.

Thursday Midday Dairy Market Summary - Butter Sales Remain Heavy

OUTSIDE MARKETS SUMMARY:

CORN:	1 Higher
SOYBEANS:	8 Higher
SOYBEAN MEAL:	$4.60 Higher
LIVE CATTLE:	$0.32 Lower
DOW JONES:	203 Points Higher
NASDAQ:	109 Points Higher
CRUDE OIL:	$0.07 Lower

MIDDAY MARKET UPDATE:

The block cheese price declined 1.75 cents closing at $1.9250 with four loads traded. The barrel cheese price gained 8 cents closing at $2.01 with one load traded. There were no unfilled bids or uncovered offers remaining for blocks with three unfilled bids for barrels remaining. This may indicate further strength in barrels as buyers become more aggressive. The dry whey price remained unchanged at 59.50 cents with no loads traded. Class III futures are 2 cents lower to 35 cents higher. The butter price gained 4.50 cents closing at $2.68 with 33 loads traded. There were 15 unfilled bids and two uncovered offers remaining at the close. There have been 160 loads traded so far this week. Grade A nonfat dry milk gained a penny closing at $1.36 with one load traded. Class IV futures are 7 to 20 cents higher. Butter futures are 0.25 cent lower to 3.47 cents higher. Dry whey futures are 0.22 cent lower to 0.45 cent higher.

Fluid Milk and Cream - Western U.S. Report 42

In California, milk production is trending weaker. Stakeholders convey lingering higher temperatures during the beginning of the fall season and herd health issues have both contributed to weaker milk output over the last few weeks. Some handlers note preliminary records indicate October 2024 milk production is down compared to October 2023 milk production and below anticipated volumes. Processors convey additional requests for contracted milk are being received. Demands for Class I, II, and IV milk are steady. Demand for Class III milk is stronger. 

In Arizona, farm level milk output is steady. Processors convey forecasted temperatures for the near-term are cooler and anticipate this helping milk output to bounce back soon. Demand for Class I milk is stronger. Demands for Class II, III, and IV milk are steady. 

Milk production is steady in New Mexico as well. Class I milk demand is stronger. All other Class demands are steady. 

Farm level milk output in the Pacific Northwest is stronger. Stakeholders convey milder weather contributed to better than anticipated milk output both in terms of per cow and total milk output. All Class manufacturing demands are steady. 

Handlers in the mountain states of Idaho, Utah, and Colorado note milk production as steady or stronger. Processors indicate milk volumes are in good shape, and demand for spot loads of milk has increased, particularly in the Idaho/Utah portion of the mountain states area. In some cases, spot load sellers convey Class IV milk is being purchased at Class III prices. Demands for all Classes vary from strong to steady. 

Cream is readily available throughout the region. Domestic cream demand is lighter. Cream multiples moved lower on the higher end of the spectrum. Condensed skim milk loads are widely available. Condensed skim milk demand is steady.