MILK
Class III milk futures lost a lot of premium this week after the strong move higher earlier in the week. There is a strong possibility further losses will be realized based on Friday's activity during spot cheese trading. Milk production continues to slowly improve through the fall as cows are settling down to more consistent feed quality. Retail milk demand is strong while demand from school accounts varies. More milk is moving to vats to meet the demand for cheese, although it is possible that might now oversupply the market, especially in the fresh cheese category. Buyers are on the sidelines due to the weakness of the market as well as the slowdown in demand that has been noted in many areas. The demand is not necessarily slower than a year ago, but slower than it has been over the past few months. January futures fell back below $17 for the first time since Oct. 22.
AVERAGE CLASS III PRICES
| 3 Month: | $19.27 |
| 6 Month: | $17.86 |
| 9 Month: | $17.43 |
| 12 Month: | $17.27 |
CHEESE
It has been a brutal week for cheese prices. Barrel price fell the largest for a one-day period over the past 20 years with the decline of 29 cents. The previous record was in 2008 when price fell 28 cents in one day. For the week, blocks fell 42.50 cents with 14 loads traded. Blocks have fallen 86.50 cents over the past two weeks. Barrels fell 70.75 cents, setting a new record weekly decline with 32 loads traded. Barrels declined 92 cents over the past two weeks. There was another distressing indicator Friday during spot trading with the only unfilled bid remaining for a load of barrels at the close being way down at 99 cents. As it was with blocks indicating the potential for price to go down to $1.66 about a week or two ago and looking like it will go there, the same may hold true for barrels. We know markets will always be overdone to the downside as well as they can be overdone to the upside. We have already seen both this year.
BUTTER
For the week, butter increased a penny with 25 loads traded. Grade A nonfat dry milk increased 2.25 cents with 17 loads traded. Dry whey increased 0.75 cent with one load traded. Price has generally been noneventful from week to week as supply and demand are generally balanced, keeping price sideways.
OUTSIDE MARKETS SUMMARY
December corn increased 2.25 cents, closing at $4.1050. November soybean gained 4.50 cents, closing at $11.4150, with December soybean meal unchanged at $388.10. December wheat gained 5.25 cents, ending at $5.9350. December live cattle fell $2.05, ending at $109.92. December crude oil declined $0.99, ending at $40.13. The Dow gained 400 points, closing at 29,480, while the NASDAQ gained 120 points, closing at 11,829.
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