Tuesday Closing Dairy Market Update - Higher Afternoon Dairy Prices

GENERAL OVERVIEW:

With a rough start to the day with most markets trading lower over the evening hours to mixed trade by midday, the dairy market ended the day higher on nearly every commodity outside of Dry Whey.

MILK:

Class III futures ended the day with gains of 8 to 18 cents, coming slightly off of the highs but still a respectable close. Class IV had limited trading today with the December contract up 13 cents from a trade earlier in the day. NDM ended the day with futures gaining 1.5 to 2.05 cents, bouncing off the lows after some limit lower moves late last week. Dry Whey was the only product to trade lower this afternoon with losses of 0.3 to 0.5 cent. The spot market was unchanged for both dry products. Protein demand is still high so fundamentally not much has changed.

AVERAGE CLASS III PRICES:

3 Month:	$16.71
6 Month:	$16.75
9 Month:	$16.88
12 Month:	$17.09

CHEESE:

Cheese is battling with high production and big stocks. While seasonal demand has helped the spot market and nearby demand, overall, the amount of cheese being produced and in inventories are still well above levels from last year. Cheese production and inventory is down from last month, so while we prepare for holidays, there could be additional price inflation in the near term.

BUTTER:

Butter traded 0.6 to 2.2 cents higher this afternoon after the spot market traded 1 cent higher. There is still plenty of inventory, although much like cheese, as we head closer to the holiday season, the spot market may find some volatility as buyers try to boost inventory levels ahead of the baking season. Butter inventories are 16% higher than last year at this time, much higher than the increase in production year over year.

OUTSIDE MARKETS SUMMARY:

December corn closed down 6.25 cents per bushel at $4.4875, November soybeans closed down 12.00 cents at $12.2925 and December soybean meal closed down $5.60 per ton at $334.60. December Chicago wheat closed down 5.75 cents at $6.1025.

December live cattle closed down $0.35 at $230.85. December crude oil is down 1.86 per barrel at $99.90. The Dow Jones Industrial Average is up 15 points at 52,377 and the NASDAQ is up 308 points at 26,477.

Tuesday Midday Dairy Market Update - Class III Higher

OUTSIDE MARKETS SUMMARY:

CORN:	5 Lower
SOYBEANS:	7 Lower
SOYBEAN MEAL:	$4.50 Lower
LIVE CATTLE:	$0.30 Lower
DOW JONES:	2 Points Lower
NASDAQ:	304 Points Higher
CRUDE OIL:	$1.58 Lower

MIDDAY MARKET UPDATE:

The block cheese price increased 1 cent to close at $1.7400 with 6 loads traded. The barrel cheese price was unchanged at $1.7200 with no loads traded. Dry Whey was unchanged at 84.25 cents with 1 load traded. Class III futures are 1 cent to 23 cents higher. The butter price increased by 1 cent, closing at $1.3100 with 8 loads traded. Grade A nonfat dry milk was unchanged at $2.0600 with no loads traded. Class IV futures are 13 cents higher. Butter futures are 0.2 cents lower to 2 cents higher. Dry whey futures are 0.05 to 0.5 cents lower. Cheese futures are 0.1 to 2.2 cents higher. Nonfat dry milk futures are 1.52 to 2.55 cents higher.

Tuesday Morning Dairy Market Summary - Tightening Dairy Supplies

OPENING CALLS:

Class III Milk Futures:	2 to 10 Higher
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 2 Lower
Soybean Futures:	4 to 7 Higher
Soybean Meal Futures:	$1.40 to $1.60 Higher
Wheat Futures:	1 to 2 Lower

MILK:

Fluid milk is available in all regions. The Central region has recently seen distribution-caused tightness for cheese production as much of the milk supply went toward bottling efforts while the market gauges school demand with the new initiative to add whole milk to school menus. High transportation costs have also added to the difficulties of moving products to lower supply areas. On the positive side, the Central region has had great weather to improve cow comfort and give a recent boost to milk production. Overnight trade is quiet heading into Tuesday, with Class III trading 2 to 9 cents higher.

CHEESE:

Cheese continues to see strong demand for mozzarella. Cheddar supply will be temporarily shorter as production has had some issues with downtime and quality issues. Holiday purchasing has begun and can be attributed to the strength seen in the spot market early last week. Export demand for cheese is especially strong in the West. However, weaker domestic food service demand is weighing on cheese prices.

BUTTER:

Butter is waiting for the seasonal buying to kick in. However, supplies are adequate despite slightly lower inventories as reported Friday, Oct. 23, in the Cold Storage report. Cream is available across all regions and butter production is steady. Demand from Mexico is taking some of the cream supply, but there is plenty to go around.