MILK
Class III milk futures held up well Tuesday despite the decline of cheese prices. The only contract showing loss was January as that is now carrying a premium to December. Contracts from May on are pushing slowly higher with overall price averages per quarter improving. This certainly is encouraging with some of this likely due to the prospect of a COVID-19 vaccine likely being distributed on a wider scale, which could improve demand from the food service industry immensely. This may not come to fruition as quickly as some would hope, but it is news that provides greater optimism. Milk movement to school accounts remains variable, as some schools are closed to strictly at home education through the end of the year while others are open but seeing quite a lot of variation of student numbers as policies forbid students from attending if they have any kind of sickness. This keeps numbers constantly fluctuating from day to day, affecting demand. USDA will announce the November Federal Order class prices on Wednesday. The trade anticipates a Class III price of $23.27 and a Class IV price of $13.41. This large price difference will result in large negative Producer Price Differentials again. The bright spot is that November might be the end of that with current futures showing prices more in line with each other.
AVERAGE CLASS III PRICES
| 3 Month: | $15.81 |
| 6 Month: | $16.21 |
| 9 Month: | $16.45 |
| 12 Month: | $16.61 |
CHEESE
Prices are heading back down with blocks not far from the previous low. There is some anticipation prices may bounce as they had last time, moving the market into a sideways pattern. It is too early to tell with concern over further losses due to strong milk production and increasing supply. Buyers do not need to chase the market but are letting price come to them. Demand is good with plentiful supply to satisfy that demand.
BUTTER
Price has made a nice rebound since last week, providing some hope of price performing better through the end of the year. Stronger nonfat dry milk price is providing some support to the butter market. Traders will be cautious as the abundance of butter supply might limit upside price potential. Retail demand remains strong with stores running specials on butter to attract customers to the store. This improves movement keeping supply from building too much.
OUTSIDE MARKETS SUMMARY
December corn declined 5 cents, closing at $4.1475. January soybeans declined 6.50 cents, closing at $11.62, with December soybean meal up $0.40 per ton, closing at $393.50. December wheat fell 14.75 cents, ending at $5.6550. December live cattle gained $0.45, ending at $110.62. January crude oil declined $0.79, closing at $44.55 per barrel. The Dow gained 185 points, closing at 29,824, while the NASDAQ gained 156, closing at 12,355.
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