MILK
It was a wild day in Class III milk futures. January through March contracts moved limit up at one point only to fall back with January and March actually closing negative. It was a classic example of emotion triggering short-covering. Traders who had sold the market at some point became anxious as futures prices continue to increase prior to spot trading and after spot trading. It was the herd mentality. Without futures falling back even though the underlying cash calculation was lower, some wanted out of the market on the idea that something must have been announced that was supportive to the market. The result was futures moving higher until emotions ran their course. Reality then set in as traders realized there was no reason for price to be higher. The result was mixed prices across the board. There were several traders hurt on the emotional swing of the market. Many processors are running their facilities at full capacity and may not be in the spot market looking for extra milk through the end of the year. This may increase the pressure on spot milk prices over the next few weeks.
AVERAGE CLASS III PRICES
| 3 Month: | $16.43 |
| 6 Month: | $16.78 |
| 9 Month: | $16.96 |
| 12 Month: | $17.08 |
CHEESE
For the week, blocks gained 3.25 cents with 26 loads traded. Barrels gained 4.25 cents with 25 loads traded. Dry whey increased 0.50 cent with two loads traded. To some degree, it is a bit surprising prices have been able to hold as well as they are, but that certainly is a plus. Buyer interest in cheese has slowed a little as most orders for the holidays are filled. There is some effort being made to limit production to demand and not build inventory into the end of the year. However, with spot milk prices showing greater discounts, it is becoming feasible to increase production and store extra cheese in some circumstances.
BUTTER
Butter production is active as cream supply is plentiful. More product is moving to inventory earlier than anticipated, which will keep price under wraps for the foreseeable future. Retail demand is strong as consumers look to baking and cooking for the holidays. For the week, butter remained steady with last week with 49 loads traded. Grade A nonfat dry milk price declined 2.25 cents with eight loads traded.
OUTSIDE MARKETS SUMMARY
December corn gained 4 cents, closing at $4.2425. January soybeans gained 7.75 cents, ending at $11.6050, with December soybean meal up $3.10 per ton, settling at $384.10. December wheat jumped 18 cents, closing at $6.0825. December live cattle gained $0.82, closing at $108.75. January crude oil declined $0.21, ending at $46.57 per barrel. The Dow gained 47 points, ending at 30,046, while the NASDAQ declined 28 points, closing at 12,378.
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