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.
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