MILK
Class III milk futures closed mixed Thursday with closer months posting gains. However, trading activity after the market was settled for the day and electronic trade continued, futures moved higher after the numbers were released for the October Milk Production report. The report was bullish, as it is the third consecutive month in which we have seen milk production per cow below the previous year. Production per cow in October was 6 pounds less than a year ago for both the top 24 states as well as the U.S. Milk production in the top 24 states was 0.3% below the previous year and the first time since May 2020 that production has been lower. Cow numbers declined 15,000 head from September with these states holding 8.90 million head, 4,000 head more than a year ago. U.S. milk production declined 0.5% from October 2020 with the nation's dairy herd totaling 9.40 million head. This was down 14,000 head from September and is 14,000 head less than a year ago. This is the first time cow numbers have fallen below the previous year in quite some time. Traders will react to these number with higher futures projected in overnight trade.
AVERAGE CLASS III PRICES
| 3 Month: | $17.80 |
| 6 Month: | $18.25 |
| 9 Month: | $18.46 |
| 12 Month: | $18.55 |
CHEESE
The bounce of cheese prices was not very great in the grand scheme of things, but it did provide a catalyst for short-covering. Further short-covering will take place in the overnight trade as was seen by futures contracts during later trading Thursday. Cheese remains available to the market with sufficient supply for demand. Inventory is expected to show a decrease for the month of October, but the level of inventory in comparison to last year is what traders will watch closely.
BUTTER
Butter found strong buyer interest Thursday with price pushing easily above $2. Supply may have tightened enough to cause buyers to become excited. However, even though inventory is decreasing and production is lower, there remains sufficient supply to fill current demand. Traders are looking ahead to the potential of a tighter supply as it appears inventory will close the year lower than last year.
OUTSIDE MARKETS SUMMARY
December corn declined 2.25 cents, closing at $5.73. January soybeans fell 11.75 cents, ending at $12.6525, with December soybean meal down $4.30 per ton, closing at $370.40. December wheat declined 2.25 cents, closing at $8.20. December live cattle gained $0.92, ending at $133.15. December crude oil gained $0.65, ending at 79.01 per barrel. The Dow closed 60 points lower at 35,871, while the NASDAQ gained 72 points, closing at 15,994.
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