MILK
Milk futures were higher across the board Monday with Class III displaying much volatility, while Class IV steadily moved to new highs. December Class IV futures closed at $19, marking a milestone for Class IV after a long period of much lower prices. Class IV prices are now generally above Class III prices. It has not been this way for quite some time. Class III futures showed quite a bit of volatility as traders pushed November and December futures more than 50 cents higher prior to spot trading. Contracts then fell back near unchanged before coming back to close moderately higher. Hope is being held out that blocks holding steady may mean that price has found support. It is uncertain yet whether culling has slowed recently due to the recent strength and the change in perception of traders or whether higher feed costs and the cost of goods and services will continue to show heavy culling. Demand for fluid milk remains steady, while demand from manufacturing is increasing. Hopefully, buyers will need to be aggressive in the spot market as orders are placed and end users want to gain more ownership of supply to be able to fill orders in a timely manner.
AVERAGE CLASS III PRICES
| 3 Month: | $18.38 |
| 6 Month: | $18.47 |
| 9 Month: | $18.48 |
| 12 Month: | $18.48 |
CHEESE
The weakness of barrel cheese was somewhat unexpected Monday, but it did move the inverted block-barrel spread closer together. The fact that there was no trading done in barrels with offers remaining at the close does not bode well for Tuesday. Of course, this decline could bring buyers back into the market more aggressively to take advantage of the price decline to pick up product. However, the current supply of cheese is sufficient for demand with no fear of tightening supply.
BUTTER
Price moved a penny closer to the $2 target price with only 5 cents to go before it reaches that level. Current support under the market would suggest that level will be reached sooner rather than later. Tighter cream supply and higher prices for available cream has reduced some of the output as many plants do not want to pay the higher price and would rather reduce production. Reducing production also reduces the burden put on plants that are short-staffed.
OUTSIDE MARKETS SUMMARY
December corn jumped 10.75 cents, closing at $5.79. November soybeans gained a penny, closing at $12.3675, with December soybean meal down $3.50 per ton, closing at $329.10. December wheat jumped 24.50 cents, closing at $7.9725. December live cattle declined $0.42, closing at $128.85. December crude oil gained 48 cents, ending at $84.05 per barrel. The Dow gained 94 points, closing at 35,914, while the NASDAQ gained 98 points, closing at 15,596.
