MILK
Milk production is sufficient for both bottling and manufacturing demand. Cheese production has remained strong overall, which is why inventory remains significantly above year earlier levels. The amount of decrease during the month of November is yet uncertain, but inventory should have declined according to the weekly cold storage reports. Strong milk production may leave inventories significantly higher than a year earlier. Demand for fluid milk is expected to slow over the next few weeks as schools will close for the holidays. Milk supply for manufacturing will improve with plants having sufficient room for processing. Spot milk prices are anticipated to remain historically strong due to lower overall milk output compared to previous years. Front-month December will be mostly priced over the next week with limited price movement after that until the prices are announced in January. USDA Monday announced the establishment of the Local Food Purchase Assistance Cooperative Agreement Program (LFPA) that will award up to $400 million for emergency food assistance purchases of domestic local foods. USDA also announced the Food and Nutrition Service is providing up to $50 million in funds provided by the American Rescue Plan for The Emergency Food Assistance Program (TEFAP) Reach and Resiliency Grants to state agencies to expand program access in rural, tribal and other currently underserved areas. This may provide some of the strength seen today in milk futures.
AVERAGE CLASS III PRICES
| 3 Month: | $19.04 |
| 6 Month: | $19.17 |
| 9 Month: | $19.18 |
| 12 Month: | $19.16 |
CHEESE
The weakness of cheese had little to no impact on Class III futures. Futures slipped back from the highs shortly after spot trading but have since come back posting a strong close. Cheese demand is remaining strong for the most part as product continues to be shipped to satisfy orders. There are some reports that orders are slowing in some cases as buyers had purchased earlier in order to make sure they were able to receive product in a timely manner.
BUTTER
Price is holding well. There is some concern that price has not increased further than it has given the fact that inventory has decreased rather rapidly to a level significantly below a year ago. Tighter cream supply will remain for a few weeks and then is expected to loosen a bit as demand from Class II product manufacturers decreases.
OUTSIDE MARKETS SUMMARY
December corn declined 2.50 cents, closing at $5.8350. January soybeans declined 5.75 cents, closing at $12.6150, with December soybean meal down $8.00 per ton, ending at $359.70. December wheat gained 2.50 cents, closing at $7.97. December live cattle gained $0.50, closing at $138.17. January crude oil jumped $3.23, ending at $69.49 per barrel. The Dow gained 647 points, closing at 35,227, while the NASDAQ gained 140 points, closing at 15,225.
