MILK
The rebound of Class III futures was short-lived with the weakness Monday nearly eliminating the gains on Friday. Barrel cheese could not hold the gain, falling back again Monday. This more than offset the gain of blocks. Milk production is slowly increasing, outpacing last year. This could oversupply the market rather quickly once holiday purchasing is finished. For now, demand is strong but not enough to support prices at higher levels. There will be a huge price decline from November to December with a current discount of $7.50 per cwt. This will be a very difficult milk check to see. The decline from August to September was hard with that being down $3.34. This will be nearly double that loss. Front-month November is basically set with some possible minor price adjustments. December is being priced but is wide open for price movement based on underlying cash. Land O'Lakes will be enforcing base milk production for the month of December and possibly longer.
AVERAGE CLASS III PRICES
| 3 Month: | $18.41 |
| 6 Month: | $17.45 |
| 9 Month: | $17.23 |
| 12 Month: | $17.18 |
CHEESE
USDA released the October Cold Storage report Monday. It mostly showed a seasonal decline of inventory except for the other cheese category. Other cheese inventory increased 1.7 million pounds, totaling 564.4 million pounds. This is 1% below a year ago. It is unusual for cheese stocks to increase at this time of year. American cheese inventory declined 18.5 million pounds, totaling 753.9 million pounds. Stocks are 1% above a year ago. Italian cheese stocks totaled 20.2 million pounds, down 549,000 pounds from a year ago. Current stocks are 23% below October 2019. Total cheese inventory declined 17.3%, totaling 1.339 billion pounds and very close to a year ago. This is neutral to the market.
BUTTER
Butter inventory declined significantly and a little more than expected. Stocks were down 43.6 million pounds, totaling 300.3 million pounds. This was positive to the market. Although stocks declined significantly, they are running 28% above a year ago. That is the bearish aspect of the market. It is certain that inventory will end the year substantially higher than it did a year ago.
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