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.
