Wednesday Closing Dairy Market Update - Class III Supported by Cheese

GENERAL OVERVIEW:

While block cheese had a small gain in the cash market, the futures market showed strength by midday, helping stabilize earlier gains in Class III futures.

MILK:

Class III futures had a modestly good day. October futures were only 4 cents higher; however, the deferred months saw gains of 14 to15 cents. A lot of the strength we've seen in Class III can be attributed to cheese climbing higher. Class IV also saw a little improvement today. October did not trade, but November and December were up 5 to 10 cents. Overall, milk supply continues to increase as cow comfort is at optimal levels. The Central region saw the most increase week over week with reports from steady to slightly higher. Spot loads are available in the upper Midwest, but limited in the Southwest. Stakeholders have noted that rising diesel costs have caused some transportation concerns throughout the market; however, yesterday President Trump released a federal tax relief order allowing use of red diesel fuel on the highways. It is too soon to see what impact that will have, and concerns over availability, state approvals and how long the red dye will stay in the system have many concerned about taking advantage of the limited deferred tax relief.

AVERAGE CLASS III PRICES:

3 Month:	$15.72
6 Month:	$16.30
9 Month:	$16.63
12 Month:	$16.87

CHEESE:

Cheese had another supportive day in the cash markets, with blocks still climbing slightly. Futures were much more friendly, rallying as much as 14 cents on the November contract. Cheese processors indicate strong demand, particularly in the mozzarella and provolone markets. Cheddar availability is heavy and spot loads are readily available.

BUTTER:

Butter cannot catch a break with markets getting pressured nearly every day. Cream supplies are steady. Many reports are seeing Mexico taking many loads of cream, while domestically, churns are very active and production is still going strong.

OUTSIDE MARKETS SUMMARY:

December corn closed down 6.00 cents per bushel at $5.0200, November soybeans closed down 5.50 cents at $12.9750 and December soybean meal closed up $11.00 per ton at $365.80. December Chicago wheat closed down 17.75 cents at $6.8650. December live cattle closed down $0.33 at $223.78. November crude oil is down 1.16 per barrel at $88.28. The Dow Jones Industrial Average is down 341 points at 51,179 and the NASDAQ is down 61 points at 27,538.

Wednesday Midday Dairy Market Summary - Class III Higher

OUTSIDE MARKETS SUMMARY:

CORN:	7 Lower
SOYBEANS:	9 Lower
SOYBEAN MEAL:	$9.20 Higher
LIVE CATTLE:	$0.275 Higher
DOW JONES:	295 Points Lower
NASDAQ:	105 Points Lower
CRUDE OIL:	$0.90 Lower

MIDDAY MARKET UPDATE:

The block cheese price increased 0.5 cents to close at $1.3400 with 16 loads traded. The barrel cheese price remained unchanged at $1.4525 with no loads traded. There were eight bids and ne offer left remaining at the close. The dry whey price increased 1.5 cents, closing at 85.0 cents wth one load traded. Class III futures are 4 to 14 cents higher midday. The butter price fell another 2 cents, closing at $1.2900 with no loads traded. There were three unfilled bids and 38 uncovered offers remaining. Grade A nonfat dry milk increased 0.75 cents to close at $2.2550 with no loads traded. Class IV futures are 5 cents higher on the November contract with limited other trading. Butter futures are 1.35 to 3.05 cents lower. Dry whey futures are 0.45 cents higher on the October contract. Cheese futures are 0.04 to 1.4 cents higher. Nonfat dry milk futures are 0.4 to 1.975 cents higher.

Wednesday Morning Dairy Market Update - Butter Rebounds into the Night

OPENING CALLS:

Class III Milk Futures:	1 to 10 Higher
Class IV Milk Futures:	Mixed
Butter Futures:	0.30 to 0.50 Higher

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 4 Lower
Soybean Futures:	Mixed
Soybean Meal Futures:	$1 to $3 Higher
Wheat Futures:	4 to 6 Lower

MILK:

High production is still looming over the market, putting a limit on how high milk futures want to climb. Individual components that make up Class III and Class IV have given the futures market some life, but it is hard to rally when supply is plentiful. Non-fat dry milk has really shined this week, but it has really been building over the last several months. Dry whey has also had some impressive price action, and demand has continued to grow.

CHEESE:

Cheese is also battling with the massive supply to work through, but overall prices have shown some promise. The cash market is continuing to find buyers for blocks. Some holiday purchasing has begun to take place, although with the supply available, there is really no hurry to get needs purchased immediately.

BUTTER:

Butter has been the weak link in the dairy market. The amount of cream available has led to a huge influx of butter production, increasing month over month and year over year. Much like cheese, holiday baking would typically become a discussion factor for this time of year, but there is no concern that the supply will not be there when demand ramps up.