Wednesday Morning Dairy Market Update - Mixed Futures and Limited Trading Volume

OPENING CALLS:

Class III Milk Futures:	Steady to 5 Lower
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	Steady to 1 Lower
Soybean Futures:	2 to 4 Lower
Soybean Meal Futures:	$1 to $2 Lower
Wheat Futures:	1 to 2 Lower

MILK:

It is uncertain how trading volume will be Wednesday. Sometimes, trading activity will be limited on the final day of the year. This may depend on the strength or weakness of the underlying cash. The current market fundamentals suggest prices will remain lower for some time to come as milk production is expected to be strong. More milk will be moving to bottling again as schools reopen after the holidays. However, that will not change the market as there is sufficient milk available for both bottling and manufacturing. The January contract is the front month as December finished trading on Tuesday. The December Federal Order class prices will be announced Wednesday. The trade anticipates a Class III price of $15.88 and a Class IV price of $13.56. USDA will also release the November Agricultural Prices report, which provides the prices used in calculating income over feed for the DMC program.

CHEESE:

It will be surprising if the block cheese price moves higher Wednesday. It has increased in the past two days with 19 loads traded. This may have filled the immediate demand that had surfaced. Once the orders are filled, there may be little reason to remain aggressive buyers.

BUTTER:

The butter price may coast through the end of the year with buyers and sellers comfortable with the current price. Churns will resume full schedules next week as cream supplies remain plentiful.

Tuesday Closing Dairy Market Update - Strong Close for Milk Futures

GENERAL OVERVIEW:

Milk futures had a strong day with double-digit gains in numerous contracts. The increase in the block cheese price fueled the rally in Class III futures. The strength of the overnight trade carried through Tuesday.

MILK:

The strength of milk futures was unexpected, as it had been anticipated that spot prices would drift through the end of the year. The buying interest in block cheese did not have an impact on milk futures on Monday, but that changed with the gain in the cheese price on Tuesday. There has not been a change in the fundamentals, which is a cause for concern, as it may indicate that there may be limited support under the market for the longer term. Milk production remains strong and is expected to be that way for some time to come. There was an article calling for farmers to cull cows to improve milk prices. That is a noble idea and would take in a usual market, such as we have seen in the past. If beef on dairy calf prices were not very strong, and replacement heifer prices were significantly lower, culling would follow the usual and historical pattern. But this is a different market, and farmers likely will have little desire to increase culling in the hope that milk prices may improve unless all do it collectively, which is unlikely. USDA will release the December Federal Order class prices on Wednesday.

AVERAGE CLASS III PRICES:

3 Month:	$15.71
6 Month:	$16.07
9 Month:	$16.53
12 Month:	$16.85

CHEESE:

The strength in the cheese price was welcomed, as buyers stepped up in the past two days, purchasing 19 loads of blocks. Wednesday is the final trading day of the year, and it will be interesting to see whether buyers will remain aggressive. Cheese production has increased as more milk has moved to manufacturing due to schools being closed for the holiday season.

BUTTER:

At least butter has been holding and not falling to new lows. This remains a concern, as cream supplies remain plentiful. Butter production is expected to remain strong, potentially increasing butter supplies significantly when demand slows due to the time of year.

OUTSIDE MARKETS SUMMARY:

March corn closed down 1.75 cents per bushel at $4.4050, March soybeans closed down 1.25 cents at $10.6225 and March soybean meal closed down $1 per ton at $302.30. March Chicago wheat closed down 2.25 cents at $5.1075. February live cattle closed up $1.50 at $230.48. February crude oil is down $0.13 per barrel at $57.95. The Dow Jones Industrial Average is down 95 points at 48,367, with the NASDAQ down 55 points at 23,419.

Tuesday Midday Dairy Market Summary - Block Cheese Pushes Higher

OUTSIDE MARKETS SUMMARY:

CORN:	2 Lower
SOYBEANS:	2 Lower
SOYBEAN MEAL:	$2.00 Lower
LIVE CATTLE:	$2.35 Higher
DOW JONES:	52 Points Lower
NASDAQ:	14 Points Lower
CRUDE OIL:	$0.05 Lower

MIDDAY MARKET UPDATE:

The block cheese price increased 4.00 cents to close at $1.3850 with nine loads traded. Buying interest has improved this week. Traders remain cautious as the potential for limited upside is possible. Once the current buying interest is satisfied, the price could drift lower. The barrel cheese price remained unchanged at $1.40 with no loads traded. The dry whey price remained steady at 73.00 cents with no loads traded. Class III futures are 1-35 cents higher, with February posting the greatest gain. The butter price increased 0.25 cent, closing at $1.4050 with four loads traded. Grade A nonfat dry milk increased 0.50 cent to close at $1.1750 with no loads traded. Class IV futures are 11-20 cents higher. Butter futures are 0.27-4.20 cents higher. Dry whey futures have not yet been traded, which is very unusual. Cheese futures are 0.20 cent lower to 2.60 cents higher. Today is the last trading day for December futures and options, with January taking over as the front month. The December Federal Order prices will be announced on Wednesday.