Tuesday Midday Dairy Market Summary - Barrel Price Jumps

OUTSIDE MARKETS SUMMARY:

CORN:	18 Lower
SOYBEANS:	24 Lower
SOYBEAN MEAL:	$0.03 Lower
LIVE CATTLE:	$0.80 Lower
DOW JONES:	622 Points Lower
NASDAQ:	274 Points Lower
CRUDE OIL:	$4.25 Lower

MIDDAY MARKET UPDATE:

Block cheese price remained unchanged at $1.8575 with no loads traded. Barrel cheese price increased 6.50 cents, closing at $1.60 with two loads traded. It was interesting to see a load of blocks initially offered down to $1.85 and then the offer was cancelled. Later in the trading session, a load was again offered at the steady price, which remained through the close. This action is likely what is keeping nearby Class III futures contacts lower. The increase of barrel cheese was relentless until a load was finally traded 6.50 cents higher with another one following suit. The buyer needed to purchase a load of cheese at whatever the cost and aggressively went after it. Butter price declined 2 cents, closing at $1.97 with one load traded. Grade A nonfat dry milk price increased 0.25 cent, closing at $1.5550 with nine loads traded. Buyers and sellers are comfortable doing business at this level. Dry whey price declined 1.25 cents, closing at 66.75 with no loads traded. Class III futures are 12 cents lower to 20 cents higher. Class IV futures have not yet traded. Butter futures are 0.05 to 1.00 cent lower. Dry whey futures are futures are 1.67 cents lower to 0.40 cent higher. USDA will release the October Agricultural Prices report Tuesday.

Milk output slowing down

 U.S. milk output is stalling as cow numbers and output per cow continues to fall. Production fell below that of a year ago for the first time since May 2020, the result of restrictions imposed by several cooperatives. The USDA’s latest preliminary data shows October output at 18.52 billion pounds, down 0.5% from Oct. 2020. The 24-State total, at 17.7 billion, was down 0.3% from a year ago. Revisions lowered the September 50-State estimate by 37 million pounds from last month’s report to 18.0 billion, virtually unchanged from 2020.

    Cow numbers totaled 9.40 million head, down 14,000 from September, fifth consecutive month they were down from the previous month, and the September head count was revised 8,000 head lower. The October herd was 14,000 head below a year ago and down a whopping 103,000 since June.

    StoneX Dairy Group says “The only time we’ve seen that in the past 23 years was late 2009 when we lost 178,000 head over 5 months with the help of CWT and truly devastating margins.”

    Output per cow averaged 1,970 pounds, down 6 pounds or 0.3% from a year ago

    California was down 43 million pounds or 1.3% from a year ago, on a 25 pound drop per cow. Cow numbers were unchanged. Wisconsin was up 69 million pounds or 2.7%, on a 20 pound gain per cow and 21,000 more cows. Idaho was up 0.9%, on 6,000 more cows. Output per cow was unchanged.

    Michigan was off 0.4% on a 30 pound drop per cow, though cow numbers were up 4,000. Minnesota was up 2.8% on 9,000 more cows and a 15 pound gain per cow. New Mexico again had the biggest drop, down 12.2%, after falling 12.5% in September. Depleted finances shuttered several operations in the state. Cow numbers were down 34,000 head and output per cow was down 45 pounds.

    New York was up 1.0%, thanks to 2,000 more cows and a 15 pound gain per cow. Oregon was unchanged across the board. Pennsylvania was down 3.1%, on 7,000 fewer cows and 30 pounds less per cow. South Dakota was up 15.3%, on 21,000 more cows and a 5 pound gain per cow. Vermont was off 0.5% on a 5 pound drop per cow. Cow numbers were unchanged. Texas was up 3.9%, with 22,000 more cows milked and a 5 pound gain per cow.

    The Daily Dairy Report says Texas increase in cows was likely due producer purchases of cows and production bases from shuttered dairies in New Mexico.

    The DDR adds that a similar phenomenon has been happening in Idaho as an exodus of dairies occurs in Washington State which scored the second biggest decline in October, down 6.9%, following a 6.8% drop in September. Cow numbers were down 15,000 and output per cow was down 30 pounds.

    Farm profit margins have been taking a beating, especially between August and October, according to StoneX, “as longer-term feed contracts expired and many producers went from $180 per ton corn contracts to $275-$300 per ton. They culled animals because of it and we’re losing animals at a near record clip,” says StoneX, though some of it may be attributed to poorer feed or poorer weather.

    The Agriculture Department’s latest Livestock, Dairy, and Poultry Outlook projects the U.S. dairy herd will continue decreasing in the first two quarters of 2022. Consequently, the annual 2022 forecast was lowered to 9.395 million head, 55,000 head below the last month’s forecast, and 60,000 less than 2021.

    The 2022 forecast for milk per cow is 24,280 pounds, 25 pounds lower than last month’s forecast. The 2022 milk production estimate was lowered to 228.1 billion pounds, 1.6 billion below last month’s forecast but 1.7 billion pounds above 2021.

    In the week ending Nov. 6, 59,900 dairy cows were sent to slaughter, up 300 from the previous week and 2,100 head or 3.6% above that week a year ago.

    There is still plenty of milk available in this country and commercial dairy product disappearance slipped a little in September. USDA’s latest data shows total cheese disappearance at 1.15 billion pounds, down 0.3% from Sept. 2020, though year to date is up 3.9%. Exports were up 20.5%. Butter totaled 186.6 million pounds, down 0.4%, with YTD up 5.2%, and exports up 111.5%.

    Dry whey disappearance, at 79.7 million pounds, was down 6.3%, with YTD off 2.2%. Nonfat dry milk-skim milk powder disappearance totaled 226.9 million pounds, down 8.0% from a year ago, with YTD up 0.4%. Exports were up 16.2% and on track for a record year, according to HighGround Dairy.

    The corn and soybean harvest is all but completed. The latest Crop Progress report shows 91% of the corn was harvested, as of the week ending Nov. 7, down from 94% a year ago, but 5% ahead of the five year average. Soybeans were at 92%, down 3% from a year ago, and 1% behind of the five year average.

    This week’s Global Dairy Trade auction saw its weighted average jump 1.9%, following the 4.3% jump on Nov. 2. Traders brought 67.0 million pounds of product to market, up from 66.0 million last time, and the most since Dec.15.

    Butter led the gains, up 3.5%, following the 4.7% advance on Nov. 2. Anhydrous milkfat was up 1.3%, after gaining 4.2% last time, and GDT Cheddar was up 2.2%, after leading the gains last time with a 14.1% advance. Whole milk powder was up 1.9%, following a 2.7% gain, and skim milk powder was up 1.4%, after a 6.6% gain last time.

    StoneX says the GDT 80% butterfat butter price equates to $2.4491 per pound U.S., up 8.2 cents, after gaining 10.6 cents last time, and compares to CME butter which closed Friday at $2.0475. GDT Cheddar, at $2.3416, was up 4.8 cents, after jumping 28.7 cents last time, and compares to Friday’s CME block Cheddar at $1.8575. GDT skim milk powder averaged $1.6676 per pound, up from $1.6450. Whole milk powder averaged $1.8086 per pound, up from $1.7785. CME Grade A nonfat dry milk closed Friday at $1.5550 per pound.

    North Asia’s market share of purchases continued to be below year-ago levels but rose above the last event, according to StoneX. “GDT volume was nearly ?at from last event. With increased purchases in North Asia from the last event most other regions experienced a decline in purchases but still maintained a market share greater than year-ago levels.”

    We do have stiff competition on the global market. StoneX says “Despite weak milk production, September EU exports came out stronger than expected, up 4.1% YoY, with August revised up to 6.6%.”

    “Cheese exports remain strong with the U.S. being the top destination. Fat-?lled exports have really taken off in the last two months. We would guess we’re seeing some substitution away from whole milk powder given the fat prices. Overall the data was bullish. Global demand was a little better than expected for September, and since we know production isn’t doing great in Europe, the strong exports are likely coming from inventory. Given the stronger exports, we had to pull EU 2021 milk equivalent ending stocks from being down 3% to 5% lower.”

    Exports were a key topic at this week’s joint annual meeting of the National Milk Producers Federation (NMPF), United Dairy Industry Association, and Dairy Management Incorporated (DMI) in Las Vegas.

    Hoards Dairyman’s Corey Geiger said NMPF’s Jim Mulhern said the U.S. is on track for a record year in exports, meaning we will export about 17% of our milk solids or all of the country’s milk output for five days per month from 9 million cows. He said 75% of the new milk we produced is in effect being exported.

    The USDEC’s Krysta Harden said no one is going to give us market share, we have to go out and get it, according to Geiger. Mexico is our biggest market, he said, but DMI’s Barbara O’Brien pointed out that the 16 countries of Southeast Asia, not including China, have a growing middle class that want dairy products.

    NMPF’s Mulhern added that New Zealand is the world’s largest dairy exporter, followed by the EU, and the U.S., but he believes we can become Number 2, and ultimately Number 1, “but our work is cut out for us.”

    Meanwhile, NMPF First Vice Chairman Simon Vander Woude called on the U.S. government to prioritize expanded market access opportunities for U.S. dairy exports at a House Subcommittee for Livestock and Foreign Agriculture hearing this week. He stressed the urgency of expanding access to dairy markets like the UK, Asia (Japan, Southeast Asia, China) and the Middle East to catch up with competitors whose countries have aggressively sought trade agreements the past decade. He highlighted other policy priorities impacting U.S. operations, including the current supply chain crisis, securing long-term relief from Chinese retaliatory tariffs, and implementation and enforcement of existing trade agreements, including the USMCA.

    After jumping 16.50 cents the previous week, the Cheddar blocks fell to $1.66 per pound Tuesday but closed Friday at $1.8575, up 10.75 cents on the week, highest since Sept. 30, and 21.25 cents above a year ago when they tumbled 27.25 cents.

    The barrels fell to $1.4450 Wednesday but finished Friday at $1.52, 2.25 cents higher, 9.75 cents above a year ago but 33.75 cents below the blocks. Sales included 5 cars of block and 28 of barrel in the week before Thanksgiving.

    Spot milk offers remained somewhat quiet this week, according to Dairy Market News, with Central prices around $1 over class at midweek. Cheese production remains similar to recent weeks, with plants running full schedules, if they can, though some are cutting back. Cheese demand is strong in most cases for Midwestern producers. Some reported lighter customer interest this week but many have been in catchup mode for weeks with labor shortages and orders.

    Western retail cheese demand is strong as buyers prepare for the holidays. Food service demand is steady and prices are favorable for international buys but loads intended for export face delays due to port congestion. That may be causing buyers to hesitate, not knowing when or if they would get product from the U.S. Delays are also occurring due to a shortage of truck drivers. Cheese stocks are tightening and output is mixed. Milk is available to run at or near capacity, though some say staffing shortages are limiting output. Uncle Sam announced a cheese solicitation for 19.2 million pounds from March to July.

    Butter climbed to $2.0475 per pound Friday, up 9.75 cents on the week, highest since Nov. 19, 2019, and 70.25 cents above a year ago, on 12 sales.

    Cream supplies are tight, says DMN, so microfixing is occurring, taking frozen blocks, thawing them, and cutting into consumer ready sticks, but the process requires additional hands which are in short supply. Butter demand is very strong and cream tightness is expected to continue potentially into 2022, says DMN.

    Western cream availability is mixed. Some contacts report availability while others say inventories are tight. Demand for cream is strong in retail and food service and international demand remains strong. A shortage of truck drivers is causing delays to cream and butter loads.

    Spot nonfat dry milk closed Friday at $1.5550 per pound, up a half-cent on the week and 47 cents above a year ago, with 12 sales reported  on the week.

    The whey continued to climb, closing at 70 cents per pound, up 3 cents on the week, highest since April 20, and 26.25 cents above a year ago, on 2 sales.

    The Agriculture Department announced the December Federal order Class I base milk price at $19.17 per hundredweight, up $1.19 from November, 70 cents below December 2020, and the highest Class I since December 2020. It equates to about $1.65 per gallon, down from $1.71 a year ago. The 2021 Class I average is $16.83, down from $16.91 in 2020, and compares to $16.99 in 2019.

    U.S. fluid sales remain below a year ago. September sales of packaged fluid products totaled 3.7 billion pounds, down 1.3% from Sept. 2020. Conventional product sales, at 3.4 billion pounds, were down 1.1% from a year ago. Organic products, at 227 million pounds, were down 4.1%, and represented 6.2% of total sales for the month.

    Whole milk sales totaled 1.2 billion pounds, down 3.4% from a year ago, with year to date consumption down 6.6%. Whole milk represented 33.2% of total milk sales for the nine month period.

    Skim milk sales, at 203 million pounds, were down 9.8% from a year ago, and down 13.2% year to date.

    Total packaged fluid milk sales for the nine months amounted to 32.9 billion pounds, down 4.5% from 2020. Conventional product sales totaled 30.8 billion pounds, down 4.6%. Organic products, at 2.1 billion, were down 2.3%, and represented 6.4% of total milk sales for the period.

    The figures represent consumption in Federal milk marketing order areas, which account for approximately 92% of total fluid milk sales in the U.S.

    U.S. per capita consumption of fluid cow’s milk has been decreasing for over 70 years, according to the USDA’s Economic Research Service (ERS). During the previous decade, it fell at a faster rate than it did during each of the previous six decades. ERS data show that the average rate of decrease was 1.0% per year over the 2000s. During the 2010s, it was 2.6% per year.

    About 90% of the U.S. population does not consume enough dairy products to meet Federal dietary recommendations, and declining per capita consumption of fluid cow’s milk prevents these individuals from consuming a diet more line in with those recommendations,” says the ERS.

    Lastly, thoughts and prayers to many here in my own backyard in northwest Washington and the lower mainland of British Columbia, Canada which received a month’s worth of rain in under 72 hours causing historic flooding for thousands to flee their homes, farms, businesses, and at least one life was lost.

Tuesday Morning Dairy Market Update - Mixed Overnight Trading

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	5 to 7 Lower
Soybean Futures:	8 to 12 Lower
Soybean Meal Futures:	$2 to $4 Lower
Wheat Futures:	10 to 14 Lower

MILK:

Milk futures were lower Monday but held well in the face of uncertainty over the omicron virus threat. An impact on the economy may not be felt more deeply until early next year. Holiday buying has been strong, resulting in good demand. Milk production is being utilized without difficulty. Spot milk availability is tighter with higher prices for spot milk than usual for this time of year. Weather has been very good for cow comfort keeping milk production strong. It is uncertain if culling is slowing now that it is near the end of the year with adjustments having been made due to higher costs. USDA will release the October Agricultural Prices report Tuesday afternoon, providing prices used in the calculation of income over feed used for the Dairy Margin Coverage program. Tuesday is the last day to trade November futures and options with the Federal Order prices announced Wednesday.

CHEESE:

Cheese prices held Monday and the industry sorts through the potential implications of the new virus and current strong holiday demand. There was no interest from buyers or sellers for blocks Monday either, indicating the market is balanced or that no one wanted to do business due to the uncertainty surrounding the market. There may be limited trading activity again Tuesday.

Butter:

Butter demand is strong and should remain that way the next week or two. Holiday buying will then be finished with buyers looking ahead to first quarter 2022 demand potential. Inventory has been decreasing substantially and will close the year significantly lower than a year ago. This should continue to provide support to price.

Monday Closing Dairy Market Update - Fears of Demand Destruction Tempered

MILK

Both Class III and Class IV futures were lower today but did not fall as much as overnight activity indicated. Steady to higher cheese prices eased some of the uncertainly, but traders remain cautious about the level of demand through the end of the year and the continued unfolding news surrounding the new COVID-19 variant. Economic fears subsided somewhat as President Joe Biden indicated there would be no shutdowns to areas of the economy and encouraged more people to receive the COVID vaccinations and booster shots. More of the movement for the market may be the level of demand that will be seen through the end of the year. Milk production has been increasing relative to the low levels of the late summer, but overall milk production has declined due to the heavy culling of cows. There is sufficient milk for both bottling and manufacturing with no shortage anywhere. Spot milk price is higher than usual during this time of year, indicating that milk supply is not or will not be burdensome. Tomorrow is the last trading day for November futures and options. USDA will release the October Agricultural Prices report tomorrow.

AVERAGE CLASS III PRICES

3 Month:	$18.91
6 Month:	$18.47
9 Month:	$18.56
12 Month:	$18.60

CHEESE

Cheese plants received greater milk supplies during the holidays and were able to handle the extra milk without difficulty. Even with that, spot milk was available at $2 under class to even with class. This extra milk was welcomed by many plants as they were able to increase production to meet demand. Delays continue to be noted for hauling and shipping which has hindered some sales to some extent. Retail outlets have compensated for this by ordering ahead of their usual order times in order to make sure they have sufficient production on the shelves for the holidays.

BUTTER

Cream supply had been tight, but it seems to be loosening a bit as we move toward December. Some plants are operating at capacity in order to meet demand and to build inventory. Other plants are leaving output a bit lighter and have opted to sell some cream at higher prices rather than increasing production. Strong demand continues to reduce inventory.

OUTSIDE MARKETS SUMMARY:

December corn fell 5.75 cents, closing at $5.81. January soybeans fell 11.25 cents, closing at $12.4150, with December soybean meal down $8.50 per ton to close at $347.70. December wheat fell 18 cents, ending at $8.0750. December live cattle fell $1.17, closing at $136.92. January crude oil gained $1.80, closing at $69.95 per barrel. The Dow gained 237 points closing at 35,136 while the NASDAQ gained 291 points closing at 15,783

Monday Midday Dairy Market Summary - New COVID Variant Weighs on Markets

OUTSIDE MARKETS SUMMARY:

CORN:	9 Lower
SOYBEANS:	10 Lower
SOYBEAN MEAL:	$7.10 Lower
LIVE CATTLE:	$0.80 Lower
DOW JONES:	315 Points Higher
NASDAQ:	312 Points Higher
CRUDE OIL:	$2.75 Higher

MIDDAY MARKET UPDATE:

Block cheese price remained unchanged at $1.8575 with no loads traded. There were no buyers or sellers showing up during spot trading. Barrel cheese price increased a penny to $1.5350 with one load traded. An unfilled bid remained below the market at the close. Butter price remained unchanged at $1.99 with two loads traded. Grade A nonfat dry milk price declined a penny to $1.5525 with one load traded. Dry whey price remained unchanged at 70 cents with no loads traded. It seems traders remain cautious over what will take place in the wake of the discovery of a new COVID variant and are not convinced it may have little to no impact on the market. Even spot prices remaining steady was considered negative as buyers may hold back for a period of time. Class III futures are 24 cents lower to 7 cents higher with front-month November showing the only gain as it corrects to the weekly AMS prices. Class IV futures are 7 to 20 cents lower. Butter futures are unchanged to 0.50 cent lower. Dry whey futures are 1.15 cents lower to 0.50 cent higher.

Monday Morning Dairy Market Update - Class III Futures Show Significant Pressure

OPENING CALLS:

Class III Milk Futures:	15 to 30 Lower
Class IV Milk Futures:	45 to 10 Lower
Butter Futures:	1 to 2 Lower

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	Mixed
Soybean Futures:	5 to 8 Higher
Soybean Meal Futures:	$3 to $5 Higher
Wheat Futures:	4 to 8 Higher

MILK:

Traders had the extended weekend to assess the impact of the new COVID variant on overall demand both domestically and internationally. The overnight reaction is negative. It is expected to remain that way until spot trading provides direction. Milk supply is sufficient for current demand. Demand for specialty holiday items has increased, pulling more milk to those areas of production. Overall demand should remain strong over the next few weeks as Christmas approaches. Front-month November futures are higher as they adjust to the weekly AMS prices released last week. Tuesday is the last trading day for November futures and options.

CHEESE:

Buyers of cheese may hold back on the spot market Monday over concerns of the impact of demand due to the new strain of COVID. There is concern over a possible further impact on shipping as well as demand from the food service industry. However, it is the holiday demand period and this should not curtail demand through the end of the year.

BUTTER:

Butter is in strong demand and should not see much impact as the lack of demand from one area may be made up by increased demand from another area. Buyers are looking ahead to next year and assessing how aggressive they need to be. Strong retail demand should remain over the next few weeks.

Wednesday Closing Dairy Market Update - An Uneventful Holiday-Shortened Week

MILK

Milk production continues to increase from the lows of the summer, but the decrease of cow numbers is keeping overall milk supply from becoming burdensome. Fluid demand has slowed due to schools being closed for Thanksgiving. That is not expected to create any problems for manufacturing as there is sufficient capacity to handle the milk. Consumer demand for milk remains strong. Plants is the Eastern regions are importing some milk due to demand outpacing local production. Milk is more available in the Central region with spot milk priced at class to $2.00 under class moving into the Thanksgiving period. Spot prices were substantially lower last year due to heavy milk supplies and limited gatherings for the holidays due to COVID-19. That will not be the case this year as families and friends will get together as usual in most cases. Dairy markets will be closed the rest of the week and will reopen again Sunday evening at 5 p.m. Central time.

AVERAGE CLASS III PRICES

3 Month:	$18.30
6 Month:	$18.61
9 Month:	$18.70
12 Month:	$18.74

CHEESE

For the holiday-shortened week, blocks remained unchanged with no loads traded. Barrels increased 0.50 cent with one load traded. Dry whey remained unchanged with one load traded. This was not much volatility for three days of trading but at least prices held. Some cheese plants are receiving discounted milk loads which is being balanced with available staff to process the milk. Cheese demand has been strong, Dairy Market News reported that some contracts feel that cheese market tones are on shaky ground. This is likely due to much of demand for the holidays having been packaged and shipped leaving reduced orders. However, cheese movement is expected to remain brisk during the next week or two for last minute demand.

BUTTER

For the week, butter price fell 5.75 cents with three loads traded. Grade A nonfat dry milk increased 0.75 cents with seven loads traded. Price fell back below $2.00 on Monday and remained there for the rest of this week. Cream supply is tight but sufficient to meet current production demand. Retail demand is strong as the holiday period approaches.

OUTSIDE MARKETS SUMMARY

December corn slipped 0.75 cent closing at $5.7975. January soybeans were down 6.50 cents, ending at $12.6650 with December soybean meal down $4.60 per ton to close at $357.60. December wheat fell 19.25 cents, ending at $8.3675. December live cattle jumped $2.50, closing at $137.90. January crude oil declined $0.11, closing at $78.39 per barrel. The Dow slipped 9 points, ending at 35,804 points, while the NASDAQ gained 70 points to close at 15,845 points.

Wednesday Midday Dairy Market Summary - Spot Trading Uneventful

OUTSIDE MARKETS SUMMARY:

CORN:	Unchanged
SOYBEANS:	6 Lower
SOYBEAN MEAL:	$5.50 Lower
LIVE CATTLE:	$2.35 Higher
DOW JONES:	38 Points Lower
NASDAQ:	37 Points Higher
CRUDE OIL:	$0.07 Lower

MIDDAY MARKET UPDATE:

Both block and barrel cheese remained unchanged during spot trading with no interest shown from buyers or sellers. Block price remained unchanged at $1.8575 with barrels at $1.5250. This left traders with little direction, keeping Class III futures steady to 16 cents lower. Butter followed suit with price unchanged at $1.99 with two loads traded. There was an unfilled bid and uncovered offer remaining at the close. Grade A nonfat dry milk price slipped 0.50 cent, closing at $1.5625 with four loads traded. Dry whey price remained unchanged at 70 cents with no loads traded. Class IV futures are 22 cents lower to 3 cents higher. Butter futures are 1.05 cents lower to 0.50 cent higher. Dry whey futures are 0.15 to 0.45 cent higher. Wednesday is the last day to trade dairy futures and options for the week. Markets will be closed Thursday for Thanksgiving and also on Friday.

Fluid Milk and Cream - Western U.S. Report 47

California milk production is steady this week. Class I demand is in balance as educational     demand has decreased due to holiday breaks, while retail consumer demand is trending higher.     Class II sales are steady. 

Arizona milk output is steady. Milk supplies are primarily going to Class I production amid strong demand. Some contacts report that loads of milk are coming from other states for dairy processers to meet production demand. Class II and Class III demand is strong in the state. 

Farm level milk production is trending higher in New Mexico. Some contacts are moving milk to other regions with tighter supplies to meet local demand. Demand for Class I milk is steady. Class II demand is strong. 

In the Pacific Northwest milk production is steady to higher. Demand for Class I and Class II milk is unchanged. Some contacts report sending milk to Canada to help in areas hit with heavy rain. 

Milk production in the mountain states of Idaho, Utah, and Colorado is steady to higher this week. In Idaho spot availability is, reportedly, tight. Strong seasonal demand is present for Class I and Class II milk. 

Contracts and demand for condensed skim are steady. In the West, demand for cream is strong; cream supplies vary throughout the region. Contacts report that cream deliveries are facing delays due to a shortage of truck drivers. Some end users are searching for spot loads to meet holiday production demand. Western cream multiples moved lower at the bottom this week, while the top is unchanged.

     Western U.S., F.O.B. Cream
     Multiples Range - All Classes:               1.1700 - 1.4000


     Information for the period November 22 - 26, 2021, issued weekly

     Secondary Sourced Information:

     PACIFIC NORTHWEST MARKET ORDER
Milk delivered to the Pacific Northwest Order 124 totaled 577.9 million pounds in October     2021. Class I utilization was 134.3 million pounds and accounted for 23.24 percent of     pooled producer milk. The uniform price at test was $19.83, up $1.19 from September 2021,     and up $1.41 from the same month a year ago.

     ARIZONA MARKET ORDER
Milk delivered to the Arizona Order 131 totaled 367.4 million pounds in October 2021. Class     I utilization was 118.4 million pounds and accounted for about 32.22 percent of pooled     producer milk. The uniform price at test was $18.65, up $0.79 from September 2021, and up     $3.04 from the same month a year ago.

     CALIFORNIA MARKET ORDER
Milk pooled on the California Order 51 totaled 1.895 billion pounds in October 2021. Class     I utilization was 409.6 million pounds and accounted for about 21.6 percent of pooled     producer milk. The Statistical Uniform Price for milk delivered to plants in Los Angeles     County, CA was $17.29, up $0.38 from September 2021, and $3.50 above the same month a year     ago.


     MONTHLY MILK PRODUCTION
The NASS Milk Production report noted October 2021 milk production in the 24 major states     was 17.7 billion pounds, 0.3 percent lower than a year ago. Milk cows in the 24 selected     states totaled 8.90 million head, 4,000 head more than a year ago. The following table shows     western states included in the report and the monthly milk production changes compared to a     year ago:

     September 2021 Milk Production, (USDA-NASS)

                 (Million Pounds)    % Change From
                                     1 Year Ago

      Arizona                385             - 3.8
      California            3337             - 1.3
      Colorado               435             - 0.9
      Idaho                 1367             + 0.9
      New Mexico             602             -12.2
      Oregon                 219               0.0
      Utah                   184             - 0.5
      Washington             529             - 6.9

Wednesday Morning Dairy Market Update - Last Trading Day for the Week

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	2 to 4 Higher
Soybean Futures:	2 to 4 Higher
Soybean Meal Futures:	Mixed
Wheat Futures:	Mixed

MILK:

Even though there was stability and minor strength in the spot complex Tuesday, milk futures closed lower. The uncertainty surrounding the general completion of holiday buying and cheese inventory significantly higher than last year, keeps traders cautious. There is sufficient milk supply available to meet demand at present. However, there is concern over potential tighter supply if culling and milk production per cow continues to decline. It is getting tough out there at the farm level due to the high prices of goods and services. Milk futures may see some pressure prior to spot trading in anticipation of limited cash trading prior to the holiday. Wednesday is the lasts day to trade dairy futures and options for the week. Dairy markets will be closed Thursday and Friday.

CHEESE:

Price potential is uncertain through the end of the year. It will depend on whether fill-in orders for the holidays are placed and whether orders for early next year increase as buyers look ahead and place orders early to make sure they receive product in a timely manner. The just-in-time mentality has changed with buyers looking further ahead to assure product is received on time.

BUTTER:

Butter price is expected to hover around this level for a period of time. Most purchases have been made and shipped for the holiday period. Forward contracting is being done for early next year as buyers see little reason for price to weaken anytime soon. Current production needs to be supplemented with inventory to meet demand.

Tuesday Closing Dairy Market Update - Milk Futures Unable to Gain Traction

MILK

Milk futures had a difficult time Tuesday despite underlying cash prices being steady to higher. Milk production has been slowing with culling rates remaining high. Yet, there remains sufficient milk for both bottling and manufacturing needs. The big push of holiday purchasing is about complete with regular demand and fill in orders being much of the business. Milk is being processed into holiday specialty items, such as eggnog, with much of those orders already placed and in the process of being filled. Weather has been good for milk production and cow comfort. This has helped many farms being able to maintain good milk production through the fall. The trend is for lower cow numbers and lower milk production per cow according to the milk production reports. It will be interesting to see the duration of herd liquidation through the coming months. Farms are going out of business, but the demand for replacements remains strong. Heifer supply is tightening increasing the prices for replacement heifers.

AVERAGE CLASS III PRICES

3 Month:	$18.34
6 Month:	$18.64
9 Month:	$18.73
12 Month:	$18.77

CHEESE

Cheese prices have at least held the gains of last week. The large jump last week may not have resulted in a void under the market. Sellers have not been aggressive in the spot market, which may indicate they either do not have much to sell or are not concerned that the market will fall apart in the near term. There is concern over the inability of blocks to move higher so far this week as buyers are not to be found. Barrel price has room to increase in order to move the block/barrels spread closer together. Wednesday is the last day to trade for the week.

BUTTER

Traders were a bit disappointed that butter price did not rally back as a result of the bullish implications of the cold storage report. However, that is no real cause for concern as strong holiday demand should continue to support price. Cream demand for holiday products continues to reduce the amount available for butter production. Buyers are already looking ahead to January demand and purchasing accordingly. There is strong demand for butter internationally, but shipping remains an issue.

OUTSIDE MARKETS SUMMARY

December corn gained 3.75 cents, closing at $5.8050. January soybeans slipped 1.25 cents, closing at $12.73, with December soybean meal down $7.80 per ton, closing at $362.20. December wheat gained 10.25 cents, closing at $8.56. December live cattle gained $0.97, closing at $135.40. January crude oil gained $1.75, ending at $78.50 per barrel. The Dow gained 195 points, closing at 35,81,4 while the NASDAQ declined 80 points, closing at 15,775.

Tuesday Midday Dairy Market Summary - Spot Prices Hold

OUTSIDE MARKETS SUMMARY:

CORN:	2 Higher
SOYBEANS:	2 Lower
SOYBEAN MEAL:	$7.40 Lower
LIVE CATTLE:	$0.90 Higher
DOW JONES:	42 Points Higher
NASDAQ:	18 Points Higher
CRUDE OIL:	$1.84 Higher

MIDDAY MARKET UPDATE:

Traders were cautious as spot trading began. There was concern there could be a repeat of last month after the Cold Storage report. Class III futures were lower prior to spot trading. However, block cheese price remained unchanged at $1.8575 with no loads traded. There were no buyers or sellers showing up to do any business. Barrel cheese price increased 1.50 cents, closing at $1.5250 with one load traded. There was an unfilled bid and uncovered offer remaining at the close. However, even with the increase of barrels, Class III futures did not change much, leaving futures lower across the board with contracts ranging from 1 to 25 cents lower. Butter price remained unchanged at $1.99 with no loads traded. A bid was posted during spot trading below the market with the buyer unwilling to increase the bid. Grade A nonfat dry milk price remained unchanged at $1.5675 with two loads traded. Dry whey price remained unchanged at 70 cents with one load traded. Class IV futures are 15 to 18 cents lower. Butter futures are 0.50 to 4.75 cents lower. Dry whey futures are 0.10 to 0.95 cent lower.

Tuesday Morning Dairy Market Update - Traders to Exercise Caution Prior to Spot Trading

OPENING CALLS:

Class III Milk Futures:	4 to 10 Lower
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	2 to 3 Lower
Soybean Futures:	5 to 8 Lower
Soybean Meal Futures:	$1 to $2 Lower
Wheat Futures:	Mixed

MILK:

Milk futures tried to make a run higher early Monday is anticipation of further gains of cheese and butter. However, barrels showed weakness and butter falling back below $2.00, dealt a blow to expectations. The bearish implications for the cheese market due to the increase of American cheese stocks may have a bearish influence on futures prior to spot trading as traders remember what happened after the September Cold Storage report. Milk production had again declined during October reducing milk supply compared to the previous year, but American cheese inventory continued to increase. The current lower trend for milk production looks as if it will continue based on the previous three months. Increasing feed prices and other costs for producing milk will have an impact on milk production.

CHEESE:

Traders will remain cautious prior to spot trading. It had been another bullish Milk Production report but another bearish Cold Storage report. Traders will be looking over their shoulders remembering what happened after the September Cold Storage report. The strong increase of cheese prices last week could have set up a similar scenario as last time with a potential void under the market.

BUTTER:

Cold storage was friendly to the market with a large decline of inventory in October moving supplies down 13% from September and 6% below a year ago. This should be supportive to the market, but it may not push price much higher in the near term.

Dairy profitability turns the corner

Farm milk prices continue to recover but more is needed. The October Federal order Class III benchmark was announced by the USDA at $17.83 per hundredweight, up $1.30 from September but $3.78 below October 2020.

Late Friday morning Class III futures portended a November price at $17.76 and December at $17.63, which would result in a 2021 average of $17.00, down from $18.16 in 2020, and compares to $16.96 in 2019.

The October Class IV price is $17.04, up 68 cents from September, $3.57 above a year ago, and the highest Class IV since Nov. 2014. The Class IV average is at $15.44, up from $13.52 a year ago but compares to $16.23 in 2019

One of the measures of dairy farm profitability appears to have turned the corner. A small rise in the September All Milk Price and some relief in corn and soybean prices moved the September milk feed price ratio in a positive direction for the first time since November 2020. The USDA’s latest Ag Prices report has the ratio at 1.69, up from 1.50 in August, but down from 2.27 in September 2020.

The U.S. all milk price averaged $18.40 per cwt., up 70 cents from August and 70 cents above Sept. 2020. The California all milk price, at $18.80, was up 70 cents from August and $1.50 above a year ago. Wisconsin’s, at $18.30, was up 90 cents from August and 40 cents above a year ago.

The national average corn price slipped to $5.45 per bushel, down 87 cents per bushel from August, but still $2.04 per bushel above Sept. 2020. Soybeans averaged $12.20 per bushel, down $1.50 from August after falling 40 cents the previous month, but were still $2.96 per bushel above Sept. 2020.

Alfalfa hay averaged $209 per ton, up $3 from August and $41 above a year ago.

The September cull price for beef and dairy combined averaged $72.90 per cwt., down $3.10 from August, $6.30 above Sept. 2020, and $1.30 above the 2011 base average of $71.60 per cwt.

Quarterly milk cow replacements averaged $1,340 per head in October, down $40 from July and even with October 2020.

California cows averaged $1,300 per head, down $50 from July and down $50 from a year ago. Wisconsin’s average, at $1,450 per head, was down $30 from July but $30 above October 2020.

Chicago-based Commodity and Ingredient Hedging LLC.’s latest Margin Watch (MW) reports that “Dairy margins strengthened further over the second half of October as milk prices continued to advance in deferred periods which more than offset a similar rise in projected feed costs.”

“A significant slowdown in the growth of milk production while demand has stayed strong has been attributed to some of the recent strength,” the MW stated. “The feed markets have been trending higher as strong ethanol demand for corn has helped to limit harvest pressure,” according to the MW.

USDA’s latest Crop Progress report shows the U.S. corn crop is 74% harvested, as of the week ending Oct. 31, down from 81% a year ago, but 8% ahead of the five year average. Soybeans were 79% harvested, down 7% from a year ago, but 2% ahead of the five year average.

The milk price recovery is too little too late for the large dairies that came up for sale in California and Texas, according to the Oct. 28 Dairy and Food Market Analyst. Editor Matt Gould talked about it in the Nov. 8 Dairy Radio Now broadcast. He says nearly 28,000 cows were sold in New Mexico since June, 6,800 cows in Texas, and 6,150 in California. Of the auctions he tracks, Gould said some 51,000 head have been sold at dispersals over the last four months.

He blames low margins and says “Dairies in Texas and New Mexico have experienced especially low milk prices so far in 2021. January thru August, prices averaged just $15.56 per cwt. in New Mexico, $2.39 below the national average. Texas was the fifth-lowest and averaged $17.31 per cwt,” according to the DFMA.

“Add in elevated feed costs,” says Gould, “up $3.16 per cwt. January thru August, and average farm-level margins fell to the lowest level in the USA since July 2013. Typically, when average revenue over feed costs are below $8.00 per cwt. for six months or more, it triggers a slowing of growth,” he concludes. “Margins have been below that level every month in 2021 and most recently totaled just $5.46 per cwt. Dairy processors face many of the same issues.”
Cheese vats were busy in September, according to USDA’s latest Dairy Products report. Cheese output totaled 1.14 billion pounds, down 0.5% from August level which was revised up 7 million pounds, but 3.3% above Sept. 2020. Year to date (YTD) output sits at 10.2 billion pounds, up 3.5% from the same period in 2020.

Wisconsin produced 289.0 million pounds of the September total, down 1.9% from August but 1.9% above a year ago. California output, at 201.9 million pounds, was up 0.1% from August and 4.5% above a year ago. Idaho produced 83.3 million pounds, up 6.9% from August but 4.4% below a year ago.

Italian style cheese totaled 486.2 million pounds, up 0.2% from August and 3.5% above a year ago. YTD Italian hit 4.3 billion pounds, up 2.6%.

American type cheese, at 454.2 million pounds, was down 0.9% from August but 5.1% above a year ago. YTD American was at 4.2 billion pounds, up 5.3%.

Mozzarella totaled 379.3 million pounds, up 2.1% from a year ago, with YTD at 3.4 billion pounds, up 1.0% from 2020.

Cheddar, which is traded at the CME, totaled 313.0 million pounds, down 6.5 million pounds or 2.0% from August, but 9.7 million pounds or 3.2% above a year ago. YTD Cheddar was at 2.95 billion pounds, up 4.0% from 2020.

Increased cheese meant less fat for butter. Churns produced 143.4 million pounds, down 4.6 million pounds or 3.1% from August, and 7.3 million or 4.9% below a year ago. YTD butter stands at 1.6 billion pounds, down 2.3% from 2020.

Yogurt output totaled 401.3 million pounds, up 2.5% from a year ago, with YTD at 3.6 billion pounds, up 4.3%.

Dry whey production totaled 75.7 million pounds, down 1 million pounds or 1.3% from August, and 1.3 million pounds or 1.6% below a year ago. YTD dry whey output is at 696.2 million pounds, down 4.1% from a year ago. Dry whey stocks slipped to 64.2 million pounds, down 4 million or 5.9% from August and were 15.7 million pounds or 19.7% below those a year ago.
Nonfat dry milk output totaled 122.4 million pounds, up 400,000 pounds or 0.3% from August but were down 3.8 million or 3.1% below a year ago. Powder production YTD totaled 1.6 billion pounds, up 5.6% from 2020. Stocks fell to 244.1 million pounds, down 40.6 million pounds or 14.3% from August, but were up 5.2 million pounds or 2.2% above those a year ago.

StoneX Dairy Group says it’s not clear if NFDM sitting in a container at port waiting for a ship would be included in this inventory data.

Skim milk powder production amounted to 62.8 million pounds, up 1.3 million pounds or 2.1% from August but were 18.3 million pounds or 22.5% below a year ago. YTD skim milk powder, at 408.9 million pounds, is down 20.8% from 2020.

Strength remained in the Nov. 2 Global Dairy Trade auction where the weighted average jumped 4.3%, following a 2.2% advance Oct. 19. Traders brought 66.0 million pounds of product to market, up from 61.4 million on Oct.5, and the most since Jan. 5.

Cheddar led the gains, soaring 14.1%, after a 2.9% gain on Oct. 19. Skim milk powder was up 6.6%, following a 2.5% gain. Whole milk powder was up 2.7%, which followed a 1.5% increase. Butter was up 4.7%, duplicating the gain last time, and anhydrous milkfat was up 4.2%, following a 2.5% gain. Lactose was up 1.6% after gaining 5.9%. Buttermilk powder was down 3.8%.

StoneX says the GDT 80% butterfat butter price equates to $2.3674 per pound U.S., up 10.6 cents, and compares to CME butter which closed Friday at $1.9350. GDT Cheddar, at $2.2941, up 28.7 cents, and compares to Friday’s CME block Cheddar at $1.5850. GDT skim milk powder averaged $1.6450 per pound, up from $1.5426. Whole milk powder averaged $1.7785 per pound, up from $1.7248. CME Grade A nonfat dry milk closed Friday at $1.57 per pound.

StoneX Nov. 3 Early Morning Update points out that China’s participation in the GDT was reduced from the last event but the sharp rise in cheese was driven by bidding out of Africa, not Asia, “likely re?ecting the dearth of available cheese out of Europe.” They ask; “What’s worse than high priced cheese? Answer: No Cheese. Or cheese that is not reliably delivered on time.”

“That seems to be the story emerging for cheese globally,” says StoneX. “The price spreads may say a lot about global demand. They may even indicate something about global supply. But what we think they really reveal is that of all the cheese exporters out there, the U.S. is, for now, the least reliable.”

The U.S. has enjoyed good exports, StoneX says, but “lately it seems the world favors more certainty around deliveries and they’re willing to pay a premium for it. In the meantime, we may have a small glut of cheese available here. Add what appears to be a seasonal slowdown and you have a recipe for weaker prices.”

The Nov. 3 Daily Dairy Report says congestion at U.S. ports and limited availability of shipping containers have constrained U.S. dairy exports, according to a USDA Global Agricultural Information Network report. The DDR citied data from Indonesia as an example of the lost U.S. sales and says European seaports face less severe backlogs so importers are reportedly switching their buying from the U.S. to Europe and Oceania.

That said, the September U.S. export data remains encouraging. Nonfat-skim milk powder exports totaled 154.5 million pounds, up 16.2% from Sept. 2020, with solid gains to Mexico, according to HighGround Dairy (HGD).

Cheese exports totaled 75.2 million pounds, up 20.5% from a year ago, and HGD says third quarter exports were the strongest on record, led by gains to Mexico, Japan, and Chile.
The U.S. shipped 6.8 million pounds of butter, up 111.5%, and topped year ago levels for the tenth consecutive month. Canada remained the top destination.

Dry whey exports, at 41.4 million pounds, were off 0.2% from a year ago.

Cheese imports, at 38.4 million pounds, were up 14.4%, and we took in 10.7 million pounds of butter, up 8.8% from a year ago.

Meanwhile, U.S. cheese prices continued to head lower as they entered November. The CME Cheddar blocks closed Nov. 5 at $1.5850 per pound, down 9 cents on the week and 75.75 cents below a year ago when they plunged the second largest drop ever, losing 44 cents, as traders anticipated results of the Presidential election and the uncertainty of the government’s Food Box program.

The barrels finished Friday at $1.5025, down 31.75 cents on the week, 81.50 cents below a year ago when they lost 21.25 cents, and are 8.25 cents below the blocks. There were 5 sales of block on the week at the CME and 26 of barrel.

After several weeks with barrel prices above the blocks, the situation corrected itself this week as a few contacts report that barrels have become a bit harder to move. Some believe this may signal more volatility for the next few months. Midwest cheesemakers suggest block demand has been steady and are trying to stay ahead of buyer calls, though a few plants are short workers and cannot run at full capacity. Milk intakes are in good balance with processing and spot load prices returned to near flat Class III to $1 above Class this week.

Western cheese demand for food service and retail is softening but interest in international markets is still strong. Transportation delays continue to challenge. A shortage of truck drivers continues to cause delays while port congestion is delaying loads. Contacts say that softening demand and cheese inventories being sold at a discount have contributed to lowering prices. Cheese plants are running busy schedules where available while others are limited due to decreased milk supplies and staffing shortages.

Butter headed for $2 per pound, marching to $1.98 on Tuesday, highest since June 4, 2020, with a sale on Wednesday hitting $1.9925, but gears reversed Wednesday and closed Friday at $1.9350, a half-cent higher on the week and 50.50 cents above a year ago, with 24 cars exchanging hands.

Cream tightness continues for Midwest butter makers as seasonally heightened production of dips and whips pulls heavily on cream supplies. Butter production is busy, but some contacts tell DMN of having to work around delayed cream deliveries and labor challenges. Butter demand is steady to stronger across food service and retail sectors and market tones remain bullish.

Cream is available to meet demand across the West though a shortage of truck drivers is causing delays. Demand for butter is strong in food service and retail, which is continuing to pull heavily on butter inventories

Grade A nonfat dry milk saw a Friday finish at $1.57 per pound, up 1.25 cents on the week, highest since Aug. 5, 2014 and 50.50 cents above a year ago, on 12 sales.

Dry whey crept up to 66 cents per pound, up 3 cents on the week, highest since April 29, and 23.75 cents above a year ago. 4 cars were sold on the week.

In dairy politics; the International Dairy Foods Association (IDFA) announced the formation of a Supply Chain Task Force to develop policy recommendations to address severe supply chain disruptions affecting the U.S. dairy industry.

Monday Midday Dairy Market Summary - Markets are Higher

OUTSIDE MARKETS SUMMARY:

CORN:	5 Higher
SOYBEANS:	11 Higher
SOYBEAN MEAL:	$1.40 Lower
LIVE CATTLE:	$0.85 Higher
DOW JONES:	221 Points Higher
NASDAQ:	61 Points Lower
CRUDE OIL:	$0.79 Higher

MIDDAY MARKET UPDATE:

Block cheese price remained unchanged at $1.8575 with no loads traded. Barrel cheese prices slipped a penny to $1.51 with no loads traded. There were no buyers showing up in either category with only one seller for a load of barrels. The market is quiet compared to what was experienced last week. Class III futures were higher in nearby months until spot trading showed otherwise. Futures are currently unchanged to 20 cents lower. Butter price fell 5.75 cents closing at $1.99 with only one load traded. There were no unfilled bids or uncovered offers remaining at the close. Grade A nonfat dry milk price increased 1.25 cents closing at $1.5675 with one load traded. Dry whey price remained unchanged at 70 cents. Class IV futures are 2 cents to 12 cents higher. Butter futures are 3.00 cents lower to 0.75 cent higher. Dry whey futures are unchanged to 0.25 cent higher. USDA will release the October Cold Storage report Monday afternoon. I expect to see a decrease of cheese inventory, but that inventory will remain higher than a year ago. Butter inventory should decline from the previous month as well as be lower compared to the previous year.

Monday Morning Dairy Market Update - Traders Look Ahead to Cold Storage

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Steady to 5 Higher
Butter Futures:	Steady to I Higher

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	3 to 5 Higher
Soybean Futures:	2 to 4 Higher
Soybean Meal Futures:	Mixed
Wheat Futures:	15 to 19 Higher

MILK:

The meteoric rise of Class III futures was fueled by increasing cheese prices, which were triggered in part by the bullish Milk Production report. Some traders were caught short in the market and needed to buy out of their positions no matter what. This propelled the market substantially higher as many orders became market orders adding to the volatility. The contraction of the nation's dairy herd and the decline of milk production per cow may indicate a tighter milk market in the future. If this takes place, it will be interesting to see how milk plants that currently have or those planning to initiate milk production limits, will react. Higher prices and tighter milk supply will likely result in the lifting of those limits. However, with high feed prices and the soaring costs of goods and service, it may not make much difference because farmers may not push to increase cow numbers or milk production. Cow and heifer prices are fairly strong as there remains good demand. There seems to be a tighter heifer market surfacing.

CHEESE:

Cheese prices may take a breather Monday after the sharp rise in prices the last half of last week. One wonders if the increase of cheese prices later in the week was the result of the market being overdone to the downside and a price correction needed to be made or if buyers became concerned over slowing milk production and reacted by buying cheese. The October Cold Storage report will be released Monday. It is anticipated inventory will decline from September but may remain higher than a year ago.

BUTTER:

Lower butter output and strong holiday demand provided the combination needed to cause buyers to aggressively look to purchase supplies. The need to make sure they have sufficient on hand for demand as well as to increase their own inventory. The Cold Storage report Monday should show a significant decrease of inventory compared to September and a year ago.

Friday Closing Dairy Market Update - Milk Futures Show Strong Gains

MILK

Class III milk futures did an about-face midweek as buyers stepped up to the plate heavily, looking for product and not finding much. A frenzy seems to have gripped the market again, pushing prices quickly higher. Class III futures have increased significantly with February through October contracts moving above $19 Friday, and that is where they closed. This certainly changes the price outlook for the year, supported by strong underlying cash. The October Milk Production report was bullish, triggering substantial positioning in the futures market. The recent trend indicates reduced milk production and lower cow numbers. Buyers are concerned supply could tighten if the trend continues. This triggered strong buying interest in both futures and cash. The magnitude of the increase might be more than necessary, but buyers seem to be leapfrogging over each other in their attempt to purchase product. Class IV futures have not been as volatile, generally moving higher somewhat steadily. All contracts posted double-digit gains Friday due to the strength of butter this week, but also from the gain of Grade A nonfat dry milk price. The October Milk Production report showed 15 of the top 24 states with production declines from a year earlier. The largest decline took place in New Mexico with a decrease of 12.2%. This was followed by Washington with a decline of 6.9% and Virginia with a decline of 4.9%. The largest gain took place in South Dakota with an increase of 15.3%. This was followed by Texas with a gain of 3.9%.

AVERAGE CLASS III PRICES

3 Month:	$18.51
6 Month:	$18.81
9 Month:	$18.91
12 Month:	$18.95

CHEESE

For the week, block cheese increased 10.75 cents with only five loads traded. Barrels gained 2.25 cents with 28 loads traded. Dry whey increased 3 cents with two loads traded. One would have thought prices would have increased much further due to the strong gains in Class III futures. However, perception and anticipation pushed the market. USDA will release the October Cold Storage report on Monday, which will either support the price rally or temper it.

BUTTER

For the week, butter gained 9.75 cents with 12 loads traded. Grade A nonfat dry milk price remained unchanged with 12 loads traded. Price pushed easily above $2 and may remain there for a period of time and possibly through the end of the year if demand remains strong.

OUTSIDE MARKETS SUMMARY

December corn declined 2.25 cents, closing at $5.7075. January soybeans declined 2 cents, closing at $12.6325, with December soybean meal up $1.40 per ton, closing at $371.80. December wheat gained 3 cents, ending at $8.23. December live cattle gained $0.37, closing at $133.52. December crude oil fell $2.91, closing at $76.10 per barrel. The Dow lost 269 points, closing at 35,602, while the NASDAQ gained 64 points, closing at 16,057.

Friday Midday Dairy Market Summary - Markets are Higher

Block cheese jumped 12.75 cents, closing at $1.8575 with three loads traded. There were no unfilled bids or uncovered offers remaining at the close of spot trading. Barrel price increased 6.50 cents, closing at $1.52 with nine loads traded. There were three unfilled bids and two uncovered offers remaining at the close. Blocks are at the highest level since Sept. 30. These gains, along with the bullishness of the October Milk Production report, have pushed Class III futures substantially higher with December posting a gain of over $1.00. January through October contracts are above $19.00. Butter price increased a penny to $2.0475 with no loads traded. Grade A nonfat dry milk price increased 2.50 cents, closing at $1.5550 with eight loads traded. Dry whey price remained unchanged at 70 cents with no loads traded. Class III futures are 5 cents to $1.08 higher with December showing the greatest gain while front-month November showed the least gain. Class IV futures are 2 to 45 cents higher. Butter futures are 2.05 to 6.45 cents higher. Dry whey futures are 0.20 to 1.70 cents higher.