MILK
Many farms report their milk production remains strong and is increasing due to good forage quality as well as good weather. Declining cow numbers are offsetting some of the production gains seen on farms. This leaves sufficient supply for bottling and manufacturing as well as leaves milk supply manageable. One large co-op is planning on implementing a production quota on Jan. 1. I wonder if they will follow through with that due to reduced milk production and strong demand. A bipartisan Dairy Pricing Opportunity Act of 2021 was introduced in the U.S. Senate earlier this week. This will set the stage for national hearings on Federal Milk Marketing Order pricing methods. Hearings will focus on current Class I skim milk pricing and the "higher of" formula that has previously been used. Initial hearings will be held within the next six months. There has been a call for a change to the Class I pricing formula due to the negative impact the current pricing formula caused last year using the average of the Class III and Class IV prices. There is a call to revert to the "higher of" pricing until a better pricing solution can be implemented.
AVERAGE CLASS III PRICES
| 3 Month: | $18.41 |
| 6 Month: | $18.63 |
| 9 Month: | $18.71 |
| 12 Month: | $18.71 |
CHEESE
Overall cheese demand has been strong with greater interest from international buyers. The world price is significantly higher than the U.S. price, making it attractive even with the higher shipping rates. The problem is the logistics of getting it shipped to where it needs to be within a reasonable amount of time. Cheese plants are running on full schedules as they try to keep up with demand. USDA will release the October Dairy Products report Friday afternoon.
BUTTER
Butter demand is steady for both retail and food services outlets but at higher levels than last year. There are a lot more holiday get-togethers planned this year than last year with more holiday baking likely. Exports have been strong much of the year and are expected to continue to remain that way as there is strong international demand. Strong cream demand from Class II products for the holidays will be coming to an end in the next two weeks allowing more cream for butter production.
OUTSIDE MARKETS SUMMARY
December corn gained 5 cents, closing at $5.77. January soybeans jumped 16 cents, closing at $12.4425, with December soybean meal gaining $1.50, ending at $358 per ton. December wheat jumped 28 cents, closing at $8.0650. December live cattle gained $1.65, ending at $137.65. January crude oil gained $1.80, closing at $66.50 per barrel. The Dow gained 618 points, closing at 34,640, while the NASDAQ gained 127, closing at 15,381.
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