MILK:
Milk production is following a seasonal pattern with steadily increasing output. Cooler weather is allowing components to improve as well. Cheese yields are improving, offsetting some of the decline of milk production. Fluid milk demand remains stable. Milk futures have had significant gains for the first two days of this week following cheese prices higher. However, even though blocks increased substantially Wednesday, traders are not buying into the gain feeling that it may be overdone. This raises the caution traders have over continued strength now that prices have moved back up to the top of the price range. Svein Tore Holsether, CEO of Yara Internationl, a Norwegian fertilizer company indicates the possibility of a worldwide food crisis over the coming year. He believes the high cost of fertilizer will result in shortfall of food production as inputs are reduced to some extent. The sharp rise of energy prices has resulted in fertilizer prices nearly tripling in cost. This will be something to watch as it may increase feed prices substantially.
AVERAGE CLASS III PRICES:
| 3 Month: | $17.16 |
| 6 Month: | $18.41 |
| 9 Month: | $18.53 |
| 12 Month: | $18.58 |
CHEESE:
Many cheese plants report they are operating on full schedules as milk production continues to improve seasonally. Spot milk is tighter, leaving plants with regular milk supply. Cheese output has been sufficient to meet demand as well as build inventory during a period of higher demand. There is concern cheese inventories will close out this year at a much higher level than they did last year.
BUTTER:
Butter production has been slowing due to a tighter cream market. Solid demand and lower output due to less cream availability are reducing inventory. This has been supporting the market and is not expected to change over the next month or so. Buyers are concerned price will continue to increase and are buying any dips in the market. This leaves the market with limited downside for the foreseeable future.
OUTSIDE MARKETS SUMMARY:
December corn jumped 14.50 cents, closing at $5.6925. November soybeans gained 4 cents, closing at $12.0350 with December soybean meal down $0.10, ending at $342.40 per ton. December wheat jumped 24.50, cents closing at $8.03. December crude oil fell $2.81, closing at $81.34 per barrel. The DOW fell 240 points, closing at 36,080 while the NASDAQ fell 264 points, closing at 15,623.
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