MILK
Milk futures were on somewhat of a roller coaster Wednesday with contracts moving negative through spot cheese trading and then moving positive to end the day. The ability of cheese prices holding provided support to the market. However, the inability of prices to move much higher kept milk futures movement in check. Milk production continues to slowly increase with fluid milk demand somewhat steady. The market may be in a precarious position due to strong milk output compared to last year and reduced demand from the food service industry. Increasing cow numbers and strong output per cow will need to be offset by strong demand. That may be tall order as we move into the next few months. USDA will release the World Agricultural Supply and Demand report Thursday. This report will show estimates for milk production, milk prices and product prices for this year and next year. This is usually not a report that moves the market, but it does provide numbers that can be used to show trend.
AVERAGE CLASS III PRICES
| 3 Month: | $16.18 |
| 6 Month: | $16.59 |
| 9 Month: | $16.78 |
| 12 Month: | $16.91 |
CHEESE
Cheese demand is reported as mixed. Buyers are purchasing on an as-needed basis. There is limited contracting being done for next year. Buyers seem to feel prices may show further weakness as time progresses, allowing for longer-term contracts to be inked at better prices. Restaurant demand is slowing again as more restrictions and closures are being done to varying degrees. Dairy Market News reports that milk availability in the Midwest is reaching the overwhelming level. Cheese production is active as increasing milk receipts are pushing plants to capacity. This may become a bigger issue through the end of the year. However, cheese prices have been able to increase and hold which does provide some hope for steady to higher prices.
BUTTER
The weakness of butter may indicate the top may have been reached in the market. The tendency is for buyers to pull back and set lower levels to purchase once price shows some weakness. Demand is strong, but it may not be strong enough to reduce inventory. Churning is active due to heavy cream supply. There are some reports of butter production exceeding demand and moving into storage.
OUTSIDE MARKETS SUMMARY
December corn gained 5 cents, closing at $4.22. January soybeans jumped 12.75 cents, closing at $11.5850, with December soybean meal up $2.70 per ton, closing at $384.40. December wheat jumped 13.25 cents, closing at $5.77. December live cattle declined $0.47, closing at $107.37. January crude oil slipped $0.08, closing at $45.52 per barrel. The Dow declined 105 points, ending at 30,069, while the NASDAQ fell 244 points, closing at 12,339.
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