Monday Closing Dairy Market Update - Agricultural Prices Report Unable To Be Released

MILK

Class III futures gains earlier in the day faded even though barrel cheese and dry whey prices increased. The substantial pressure on butter price indicates there may be limited upside potential for prices through the end of the year. Butter was the strong category of the spot market providing hope for higher milk prices as it would provide some support to the rest of the complex. That has changed. It will be difficult for milk futures to show much upside potential, as underlying price increases will be short-lived. That has been the pattern for a while and will continue to be the pattern for a while. Milk production is not going to slow down anytime soon. Milk production per cow continues to improve and is expected to continue to do so over the next few months. USDA has not released the Agricultural Prices for the month of August. They were having difficulties during the day reporting daily prices for livestock due to some problems with their reporting system. This will leave us to report that information as we receive it Tuesday.

AVERAGE CLASS III PRICES

3 Month:	$20.43
6 Month:	$19.80
9 Month:	$19.76
12 Month:	$19.76

CHEESE

Cheese prices have been declining but at a steady downward trend and not what took place in butter Monday. Buyers have become less aggressive on the spot market, as they may now have purchased sufficient supply for the early needs of the market for the holidays. Cheese supply is readily available out in the country, reducing the need to come to the spot market to obtain supply. The market may not continue to decline but may have limited upside, which would keep traders bearish.

BUTTER

The butter market may be reflecting what is taking place. Consumers have been purchasing butter ahead on recommendation of various publications due to the potential for a butter shortage. Now that hype may be satisfied along with buyers having filled a lot of orders that have already been place earlier than usual, leaving a demand void. Price fell back to the lowest level it has been since Aug. 19. The decline Monday was the largest one-day price decline since Jan. 26. Butter futures indicated that butter price would decline as time moved on. Now it is taking place and maybe will fall further than anticipated, depending on ongoing demand.

OUTSIDE MARKETS SUMMARY

December corn gained 10.75 cents, closing at $6.9150. November soybeans gained 19.25 cents, closing at $14.07 with December soybean meal up $2.70 per ton closing at $428.10. December wheat jumped 53 cents, ending at $8.8225. December live cattle declined $0.52, closing at $152.47. December crude oil declined by 1.37, closing at $86.53 per barrel. The Dow declined 129 points, closing at 32,733, while the Nasdaq declined 114 points, closing at 10,988.

Monday Midday Dairy Market Summary - Butter Falls Apart

OUTSIDE MARKETS SUMMARY:

CORN:	9 Higher
SOYBEANS:	11 Higher
SOYBEAN MEAL:	$0.60 Lower
LIVE CATTLE:	$0.52 Lower
DOW JONES:	69 Points Lower
NASDAQ:	76 Points Lower
CRUDE OIL:	$2.47 Lower

MIDDAY MARKET UPDATE:

Block cheese price remained unchanged at $1.96 with two loads traded. Barrel cheese price increased 1.75 cents, closing at $1.9425 with three loads traded. This provided strength to milk futures for a period of time, but that strength was reduced once butter traded. Butter price fell 19.50 cents, closing at $2.94550 where price has not been since Aug. 19. This basically eliminates the ideas that there will be a butter shortage through the end of the year. If there were a butter shortage, price would be increasing to find a level where demand would slow. That seems to have already been accomplished. Grade A nonfat dry milk price declined 0.50 cent, closing at $1.4250 with no loads traded. Dry whey price gained a penny, closing at 44 cents. Class III futures are 17 cents lower to 26 cents higher. Class IV futures are unchanged with bid and offers very wide. Butter futures are 2.10 to 7.50 cents lower. Dry whey futures are steady to $0.57 cent lower. USDA will release the September Agricultural Prices report Monday afternoon, providing average prices used in calculating income over feed for the Dairy Margin Coverage program.

2022 herd expansion weakest in 15 years

U.S. milk production jumped again in September thanks to increases in cow numbers and output per cow, but there’s more to the report than meets the eye.

The U.S. Agriculture Department’s latest data shows output at 18.28 billion pounds, up 1.5% from September 2021. The 24-state total, at 17.5 billion pounds, was up 1.6%. It is the third monthly increase in 2022 and revisions raised the 50-state August total by 15 million pounds to 19.03 billion, up 1.7% from a year ago instead of the 1.6% increase originally reported.

Cow numbers were expected to rise, but the September herd totaled 9.41 million, down 2,000 head from August numbers which were revised 14,000 head lower. The September herd was up 6,000 from a year ago, the first time since September 2021 the herd size was above a year ago, but was 8,000 fewer than the peak in May.

StoneX Dairy Group called the report neutral to slightly bullish, and with only 52,000 cows added to the herd over four months, 2022 has presented the weakest herd expansion seen in the U.S. over the last 15 years.

Output per cow averaged 1,943 pounds, up 27 pounds, or 1.4%, from September 2021. August output was revised up 4 pounds to 2,022 pounds.

Third quarter milk output was up 1.2% from 2021, with cow numbers unchanged from second quarter but 29,000 less than third quarter 2021.

California output totaled 3.3 billion pounds in September, up 0.5% from a year ago. Cow numbers were up 4,000, and output per cow was up 20 pounds. Wisconsin produced 2.6 billion pounds, up 0.9%. Cow numbers were down 7,000, but output per cow was up 30 pounds from a year ago.

Idaho was up 2.4% on a 30-pound gain per cow and 6,000 more cows. Michigan was down 0.7% on a loss of 11,000 cows. Output per cow was up 40 pounds. Minnesota was up 0.6%, thanks to a 45-pound per cow gain offsetting an 8,000-cow drop. New Mexico was down 3.3% on a 16,000-cow drop. A 40-pound increase in output per cow could not offset the loss in cow numbers.

New York was up 2.2%, thanks to a 55-pound gain per cow offsetting a loss of 3,000 cows. Oregon was down 0.9% on a loss of 1,000 cows and unchanged output per cow.

Pennsylvania was off 0.1%, on a drop of 5,000 cows. Output per cow was up 15 pounds.

South Dakota was up 14.9%, thanks to 25,000 more cows, but output per cow was down 10 pounds. Texas was up 8.5% on 30,000 more cows and a 70-pound gain per cow.

Vermont was unchanged, thanks to a 45-pound gain per cow offsetting the loss of 3,000 cows. Washington was down 1.2% on 7,000 fewer cows, though output per cow was up 30 pounds.

USDA’s October Livestock Dairy and Poultry Outlook said based on recent milk production information, the forecast for the average number of milk cows in 2022 has been increased 5,000 head to 9.41 million as a more rapid pace of expansion is expected in late 2022. The projected average yield per cow was adjusted higher for the remainder of 2022 at 24,110 pounds.

More dairy cows are expected in the first half of 2023, and productivity is expected to be higher. Cow numbers were increased 10,000 head to 9,425 million. Milk per cow was raised 20 pounds to 24,320 pounds, according to the USDA.

Dairy cow culling fell in September. An estimated 260,500 head were sent to slaughter under federal inspection, according to the latest livestock slaughter report, down 5,600 head from August and 4,100, or 1.5%, below September 2021. Culling in the nine months totaled 2.28 million, down 59,800, or 2.6%, from 2021.

Culling in the week ending Oct. 8 totaled 60,000 dairy cows, down 1,100 from the previous week but 600 head, or 1%, above a year ago.

Dairy cow slaughter has exceeded 2021 levels for three consecutive weeks, according to StoneX; however, the market share of dairy cows being processed as part of the beef market has fallen from year-ago levels. Total cattle slaughter is also up and has exceeded year-ago levels for the last seven weeks. Feed costs and availability are blamed. That coupled with the strong cash price for cattle is lending plenty of fuel to incentivize farmers to sell their cows.

International dairy markets remain bearish. The Oct. 18 Global Dairy Trade weighted average dropped 4.6%, following the 3.5% decline Oct. 4. Traders brought 64.8 million pounds of product to market, down from 68 million Oct. 4. The average metric ton price fell to $3,723, down from $3,911.

Declines were led by skim milk powder, down 6.9%, following a 1.6% slip Oct. 4. Whole milk powder was down 4.4% after slipping 4%. Cheese was down 3.9% following a 3.8% decline. Anhydrous milkfat and butter were down 2.7% and 2.6% respectively, after AMF fell 1.7% Oct. 4 and butter was down 7%.

StoneX said the GDT 80% butterfat butter price equates to $2.1468 per pound, down 5.8 cents after dropping 16.50 cents in the last event, and compares to CME butter which closed Friday at a world high $3.20. Cheddar, at $2.1632, was down 9 cents after losing 8.2 cents, and compares to Friday’s CME block cheddar at $2.0575. GDT skim milk powder averaged $1.4744 per pound, down from $1.5864 (11 cents). Whole milk powder averaged $1.5519 per pound, down from $1.6208 (7 cents). CME nonfat closed Friday at $1.42 per pound.

StoneX said Southeast Asia purchases declined substantially from the last event along with Europe and Africa, while North Asia purchases increased.

HighGround Dairy said so far, buyers are not concerned about the slow start to the New Zealand milk production season.

The GDT is waiting on China. President Xi Jinping kicked off his Communist Party Congress Oct. 16. His zero-COVID policies remain in place, locking down major cities, which has greatly weakened China’s economy and its purchases.

Cooperatives Working Together sales this week totaled 1.1 million pounds of American-type cheese and 77,000 pounds of cream cheese. The product is going to customers in Asia and Middle East-North Africa through February.

CME cheddar blocks closed Oct. 21 at $2.0575 per pound, up 0.75 cents on the week and 24.75 cents above a year ago. The barrels climbed to $2.2050 on Wednesday but closed Friday at $2.09, down 3.50 cents on the week after losing a dime the week before, but were 22.75 cents above a year ago and just 3.25 cents atop the blocks. Only one car of block was sold all week and 13 of barrel.

Midwest cheesemakers view the barrel-block price inversion as an inhibitor, said Dairy Market News. Barrel averages have topped the blocks since April as barrel inventories remain snug. Cheese demand for all varieties is strong, and Midwest vats are running as actively as cheesemakers are either keeping up or running behind orders. Milk availability has tightened despite growing output, said DMN.

Looking westward, export cheese demand remains strong, especially from Asian buyers. Cooler weather is contributing to cow comfort and thus milk output.

Butter climbed to $3.20 per pound Tuesday and stayed put, up 2.50 cents on the week and $1.3650 above a year ago. There were no sales all week at the CME.

Butter demand is exactly where contacts expected it to be in mid to late October: vigorous, said DMN. Plants are churning or micro-fixing to their full ability to keep up with demand, but minds ponder how long the price will remain in the clouds. Cream availability continues to grow, and contacts do not foresee a tight cream market in the near-term, particularly as the holidays approach, said DMN.

The higher milk output and resulting cream supply is a result of cooler weather out west, and milk is moving steadily into Class II production. Some plants are acquiring additional cream to maximize production and meet current demand. Other plant’s schedules are limited due to labor shortages or scheduled maintenance. Some retail customers are fervently looking for additional butter, said DMN, as they underestimated their fourth quarter needs.

Grade A nonfat dry milk fell to the lowest price since Oct. 5, 2021, closing Friday at $1.42 per pound, 11.75 cents below a year ago. Thirteen cars sold on the week.

CME dry whey closed Friday at 44 cents per pound, a quarter-cent lower and 17.75 cents below a year ago, with one sale reported on the week at the CME.

Checking demand; August total cheese utilization hit 1.2 billion pounds, up 1.9% from August 2021, up 1.6% domestically and up 5.9% on exports, according to HighGround Dairy’s Lucas Fuess in the Oct. 24 Dairy Radio Now broadcast.

August marked the strongest year-over-year gain since March, he said, driven mostly by firm demand for American-style cheese. And, while the data is delayed here in October, he said it helps explain why prices have remained above $2.

Butter disappearance totaled 185.6 million pounds, down 3.3% from a year ago, with domestic usage down 7.5%, while exports were up 118.8%. Fuess blamed the higher prices for the domestic downturn, but the weaker butter production and declining stocks keep the price firmly supported. He warned that the timing of the butter price downfall could come any day. As soon as end users realize they are good on supply into the holidays and traders become concerned over holding that last load of expensive butter, then we might tumble pretty quickly.

Nonfat-skim milk powder totaled 221.7 million pounds, down 3% from a strong year ago number. Domestic use was up 39.8% while exports were down 17%.

U.S. fluid milk sales looked a little better in August. The latest data shows sales of U.S. packaged fluid products totaled 3.6 billion pounds, down just 0.8% from August 2021.

 Conventional product sales totaled 3.4 billion, up 0.7% from a year ago. Organic products, at 241 million pounds, were up 2.1% and represented 6.6% of total sales for the month.

Whole milk sales totaled 1.26 billion pounds, up 3.1% from a year ago, up 1.2% year to date and represented 34.2% of total sales YTD. Skim milk sales, at 186 million pounds, were down 2.8% from a year ago and down 8.2% YTD.

Packaged fluid sales for the eight months totaled 28.6 billion pounds, down 2.2% from 2021. Conventional product sales totaled 26.6 billion, down 2.3%. Organic products, at 1.9 billion, were down 1.5% and represented 6.7% of total sales.

The November federal order Class I base milk price was announced at $24.09 per hundredweight, up $1.38 from October, $6.11 above November 2021, and the highest November price ever, topping to the November 2014 high by 3 cents. It also equates to $2.07 per gallon, up from $1.55 a year ago. The 11-month average stands at $23.76, up from $16.61 a year ago and $16.64 in 2020.

Fluid consumption used to utilize over a third of U.S. milk output, but those days are long gone. The Sept. 28 Daily Dairy Report stated that fluid use in the first six months of 2022 only accounted for 18.5% of U.S. total output, down from 18.9% in 2021, but compares to 25.3% in 2012, for example.

As I pointed out last week, Coca-Cola’s Fairlife product is making a gallant attempt to bring milk drinkers back. It has reportedly seen double-digit growth this year, according to the Sept. 26 Dairy Industry SmartBrief.

The Oct. 7 Dairy and Food Market Analyst said plant-based brands are embracing dairy because the plant-based category is no longer growing, and many companies are finding themselves in trouble. For example, compared to its peak, Beyond Meat’s stock price has decreased by 94%.

Similarly, oat milk producer Oatly’s stock has decreased by 92% compared to its peak, and the Very Good Company, a Canadian plant-based cheese and meat brand, is down 98% from its high. Though not to the same extreme, Danone, the owner of plant-based milk company Whitewave Foods, has seen its stock price struggle. Since announcing the purchase of Whitewave July 16, the company’s stock has decreased by nearly one-third, the Analyst said.

Down on the farm, margins continued to decline the first half of October on weaker milk prices and steady to higher cost feed, according to the latest Margin Watch from Chicago-based Commodity and Ingredient Hedging LLC.

USDA’s October WASDE report confirmed lower yield and production estimates for corn and soybean crops which reduced forecasted ending stocks, the MW reported. This along with a slower-than-normal start to planting in Argentina due to abnormal dryness has helped to maintain a firm tone in the markets. Although milk prices have declined recently, they remain elevated from a historical perspective, supported by strong exports and butter prices.

Speaking of crops, the USDA’s latest Crop Progress report shows the U.S. corn harvest is 45% complete, as of the week ending Oct. 16, up from 31% the previous week, 5% behind a year ago and 5% ahead of the five-year average. 53% was rated good to excellent, 7% behind a year ago.

The report also shows 96% of the soybeans dropping leaves, 2% ahead of a year ago and 2% ahead of the five-year average. Harvest is at 63%, up from 44% the previous week, 5% ahead of a year ago and 11% ahead of the five-year average. 57% of the beans are rated good to excellent, 8% ahead of a year ago.

Monday Morning Dairy Market Update - Higher Overnight Trade May Not Hold

OPENING CALLS:

Class III Milk Futures:	Steady to 5 Higher
Class IV Milk Futures:	Mixed
Butter Futures:	Steady to 1 Lower

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	12 to 16 Higher
Soybean Futures:	8 to 12 Higher
Soybean Meal Futures:	$1 to $3 Higher
Wheat Futures:	40 to 50 Higher

MILK:

Milk futures may have a difficult time moving higher even if there is a bounce in underlying cash. The cash market is reflecting what is taking place out in the country. There is little to get excited about at the present time. Some buying of futures may take place as some look at a correlation between corn price and milk prices. This may be the reason for higher milk futures overnight as traders try to take advantage of market emotion. The larger picture indicates prices may have some difficulty increasing for any duration of time. USDA will release the September Agricultural Prices report on Monday, providing the average prices used in calculating income over feed used in the Dairy Margin Coverage program.

CHEESE:

Prices have been trending lower following a somewhat seasonal pattern. There is some disbelief over the recent weakness as the market has moved into the strong demand period of the year. However, buyers have already been preparing for this period over the past two months. When looking at the movement of cheese prices, it is clearly seen that a seasonal price increase has taken place since September and may have reached its peak.

BUTTER:

Price continues to hold well, but it may have a difficult time moving higher through the rest of the year. Inventory is not increasing, but supply seems to be available for demand. Some churns have been increasing output as they can as cream has become more available. Prices may remain choppy this week.

Friday Closing Dairy Market Update - Fluid Milk Sales Increase 0.8%

MILK

It has been a brutal week for Class III milk futures. The November contract declined nearly 90 cents per cwt with December down about 60 cents per cwt. Futures moved lower each day this week as underlying cash prices fell. Class IV futures declined but not to the extent of Class III futures. Class IV had to follow butter lower with futures near the same level they were a week ago. The bounce on Monday was eliminated throughout the rest of the week. August fluid milk sales showed an increase of 0.8% defying the usual trend of lower sales. Whole milk sales increased 3.1%, flavored whole milk sales fell 14.4%, reduced-fat milk slipped 0.4%, low-fat milk declined 2.8%, fat-free skim milk declined 9.0%, flavored fat-reduced milk sales increased 3.8%, buttermilk increased 3.7% with other fluid milk products gaining 20.0%. Organic whole milk sales increased 6.6%, organic flavored whole milk jumped 37.5%, organic reduced-fat milk declined 1.1%, organic low-fat milk sales declined 8.4%, organic fat-free skim milk declined 6.7%, organic flavored fat-reduced milk jumped 25.4% with other organic fluid milk product sales up 85.7%. This certainly is a good sign but likely short-lived, as it may be tied more to seasonality.

Average Class III Prices

3 Month:	$20.28
6 Month:	$19.75
9 Month:	$19.73
12 Month:	$19.74

CHEESE

For the week, blocks declined 9.75 cents with four loads traded. Barrel cheese price fell 16.50 cents with three loads traded. Dry whey declined a penny with one load traded. Buyers stepped back with no one showing up some days. It is not the fact that there is no demand, but the fact that buyers have purchased ahead and are able to get supply without difficulty in the country.

BUTTER

For the week, butter declined 6 cents with 11 loads traded with eight of those loads trading Friday. Grade A nonfat dry milk price increased 0.50 cent with four loads traded. November butter futures hold a discount in anticipation of weakness over the next few weeks. If that does not materialize, futures will close the gap and move higher to align with cash.

OUTSIDE MARKETS SUMMARY

December corn declined 1.50 cents, closing at $6.8075. November soybeans gained 5.50 cents, closing at $13.8775, with December soybean meal up $10 per ton, closing at $425.40. December wheat declined 9.25 cents, closing at $8.292. October live cattle dropped $1.02, ending at $150.37. December crude oil declined $1.18, closing at $87.90 per barrel. The Dow jumped 828 points, ending at 32,682 while the Nasdaq gained 310 points, closing at 11,102.

Friday Midday Dairy Market Summary - Cheese Prices Hold

OUTSIDE MARKETS SUMMARY:

CORN:	1 Lower
SOYBEANS:	6 Higher
SOYBEAN MEAL:	$10.10 Higher
LIVE CATTLE:	$0.70 Lower
DOW JONES:	773 Points Higher
NASDAQ:	261 Points Higher
CRUDE OIL:	$1.57 Lower

MIDDAY MARKET UPDATE:

Both blocks and barrel cheese prices remained unchanged at $1.9600 and $1.9250, respectively. There was one load traded in blocks with two uncovered offers remaining at the close. No buyers or sellers showed up for barrels. Even though stability took place Friday, it had no impact on Class III futures. The weakness of the past week was not going to turn the bearishness of the market just because cheese prices were steady. Dry whey futures were unchanged at 43 cents with no loads traded. Class III futures are unchanged to 17 cents lower. Butter price slipped another 0.50 cent, closing at $3.14 with eight loads traded. Buyers were more aggressive at doing business but not aggressive enough to push price higher. Sellers were willing to move product at bids, leaving one uncovered offer remaining at the close. This certainly does not suggest a fear of running out of butter. Grade A nonfat dry milk increased a penny, closing at $1.43 with one load traded. Class IV futures trading activity has been light with prices ranging from 12 cents lower to 2 cents higher. Butter futures are 2.27 to 2.97 cents higher. Dry whey futures are unchanged to 0.50 cent lower.

  

Friday Morning Dairy Market Update - Supplies Are Readily Available

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Steady to 5 Lower
Butter Futures:	Steady to 1 Lower

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 2 Higher
Soybean Futures:	7 to 9 Higher
Soybean Meal Futures:	$2 to $3 Higher
Wheat Futures:	4 to 6 Higher

MILK:

Overnight trade is mixed with November higher while October and February contracts are lower. Traders will not be aggressive buyers as there is little to get excited about in the current market. Milk futures continue to decline due to underlying cash weakness. Class III futures have fallen substantially more than Class IV due to butter showing limited losses in comparison to cheese. Current milk supply is sufficient for both manufacturing and bottling demand. Production is slowly improving seasonally as cooler weather improves cow comfort and feed supplies are of good quality in most cases. The cost of production is high and may be increasing as there is a shortage of diesel fuel developing that may push price higher. Electricity rates are also increasing in many areas among other things. These will not be compensated for through the Dairy Margin Coverage program and will need to be absorbed. December and January Class III futures closing below $19.00 was a difficult thing to see.

CHEESE:

Cheese prices have been down at these levels in September and then moved higher. However, that may be less likely due to the time of year. Buyers were more aggressive, looking ahead to holiday demand and purchasing to obtain supply for orders from companies preparing for the holidays. That may not be the case now as much of that demand may be filled. Demand will be ongoing, but not as aggressive as it had been. Buyers can obtain cheese in the country as there are sufficient supplies available.

BUTTER:

Price is holding well with only minor weakness taking place so far this week. Downside may be limited in the near term, but weakness is anticipated before the end of the year. Churning is increasing but not by leaps and bounds. Plants are increasing production as they are able.

Thursday Closing Dairy Market Update - Support Remains Elusive

MILK

Milk futures continue to decline in most contracts as weakness in cash prices is being reflected in futures. Once the early holiday buying that generally takes place during September and October by packagers and recutters was complete, the rug was pulled out from under the market. It is not a matter that demand has fallen but that there is sufficient supply allowing buyers to purchase product in the country rather than coming to the daily spot market. Some believe that the amount of product traded on the daily spot market is not a true reflection of the actual market. However, it does closely reflect the market as it indicates what is going on in the country. Prices on the CME spot market are not going to trade much outside of what is taking place in the country otherwise there would be more activity in daily trading as buyers and sellers would take advantage of any disparity. Milk production in the West is holding and is expected to improve as cooler weather unfolds. The issue they are dealing with is the availability of water. This may have a greater impact in time if the weather does not change from the current pattern. If the railroad workers end up striking next month, that would also have a devastating impact on the availability of feed. We certainly hope that will not take place as it would have a devastating impact on the economy.

AVERAGE CLASS III PRICES

3 Month:	$20.34
6 Month:	$19.79
9 Month:	$19.77
12 Month:	$19.81

CHEESE

Barrel cheese price has fallen 22 cents over the past six trading days. This is not a record decline over that period of time, but it is significant given the time of year. Early last week, barrel supply was termed as tighter with buyers aggressive and price above blocks. That quickly changed as buyers had sufficient on hand and become concerned over ongoing demand. Buyers do not want to purchase too much ahead, and manufacturers want to move product rather than hold onto it.

BUTTER

Butter may be at the point where price may slowly erode through the end of the year. Demand will remain strong, but buyers will see there is sufficient supply on hand reducing the fear of a shortage. Some butter manufacturers are increasing production as they can with cream more available due to increased milk production and slowing ice cream production. However, it will be a long time before inventory will be rebuilt to a comfortable level.

OUTSIDE MARKETS SUMMARY

December corn declined 2.75 cents closing at $6.8225. November soybeans closed $0.50 cents higher at $13.8225 with December soybean meal up $6.70 per ton closing at $415.40. December wheat declined 2 cents ending at $8.3850. October live cattle slipped $0.05 closing at $151.40. December crude oil gained $1.17 closing at $89.08 per barrel. The Dow gained 194 points closing at 32,033 while the Nasdaq declined 178 points closing at 10,793.

Thursday Midday Dairy Market Summary - Cheese Continues to Drop

OUTSIDE MARKETS SUMMARY:

CORN:	2 Lower
SOYBEANS:	1 Higher
SOYBEAN MEAL:	$6.50 Higher
LIVE CATTLE:	$0.07 Higher
DOW JONES:	352 Points Higher
NASDAQ:	124 Points Lower
CRUDE OIL:	$1.57 Higher

MIDDAY MARKET UPDATE:

Block cheese price declined 3.75 cents, closing at $1.96 with one load traded. Barrel cheese price declined 5.50 cents, ending at $1.9250 with no loads traded. There were two offers and one unfilled bid remaining at the close. Over the past six trading sessions, barrel cheese price declined 22 cents. This is certainly not friendly for the market with buyers having no need to come to the spot market to purchase supply. Class III futures are 27 cents lower to 4 cents higher. Both December and January are trading below $19.00. Butter price declined 0.50 cents, closing at $3.1450 with one load traded. Grade A nonfat dry milk price remained unchanged at $1.42 with no loads traded. Dry whey price remained unchanged at 43 cents with no loads traded. Class IV futures are 46 cents lower to 2 cents higher. Butter futures are steady to 1.00 cent lower. Dry whey futures are steady.

Fluid Milk and Cream - Western U.S. Report 43

California milk production is steady. Contacts report milk output is down compared to this     time last year and below some previously forecasted levels. Milk volumes are available for     processing though some plant managers say spot availability has declined compared to the     start of October. Demands for Class II and III are steady to higher, while Class I sales are     unchanged. 

Milk output is unchanged in Arizona, though some contacts are hopeful that cooler     temperatures in the state will contribute to increased output in the coming weeks.    Processors say they continue to bring loads of milk in from other states, as local volumes     remain tight. Demand is steady across all Classes. 

In New Mexico milk production is steady but remains below some stakeholders' expectations. The NASS Milk Production report released on October 20th showed that September production had declined in the state by 3.5 percent. Contacts say this decline was mostly driven by a reduction in the statewide milk cow population. Milk volumes are tight, and some plant managers say they are sourcing loads of milk from other states. Across all Classes, demand is unchanged from last week. 

In the Pacific Northwest milk production is steady. Stakeholders say milk volumes are available for processing. Tanker availability is limited, and some plant managers say this is preventing them from moving loads of milk outside of their local areas. Demand for Class I is trending higher, while Class II and III demands are unchanged. 

In the mountain states of Idaho, Utah, and Colorado contacts report a significant decline in temperatures over the last week. Contacts report this drop in temperatures has contributed to a decline in milk production. Processors say milk is available for them to run busy schedules. Some plant managers report they are selling loads of milk due to scheduled plant maintenance. Some of these milk loads are moving to other parts of the region, where supplies are tighter. Demand is steady across all Classes. 

Contract condensed skim demand is strong in the West, though contacts report limited spot availability. Stakeholders say spot interest in condensed skim is steady to higher as some purchasers are looking for additional loads. Cream volumes are becoming more available in the region, and spot purchasers say local multiples have moved lower in recent weeks. Class II producers and butter makers are actively purchasing loads of cream. Cream multiples moved lower at the top of the range, while the bottom was unchanged.

     Western U.S., F.O.B. Cream
     Price Range - All Classes; $/LB Butterfat:   3.4170 - 4.1835
     Multiples Range - All Classes:               1.0700 - 1.3100
     Price Range - Class II; $/LB Butterfat:      3.8641 - 4.1835
     Multiples Range - Class II:                  1.2100 - 1.3100

Thursday Morning Dairy Market Update - Price Weakness Causes Uncertainty

OPENING CALLS:

Class III Milk Futures:	Steady to 8 Higher
Class IV Milk Futures:	Steady to 5 Lower
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	2 to 3 Higher
Soybean Futures:	6 to 9 Higher
Soybean Meal Futures:	$3 to $4 Higher
Wheat Futures:	7 to 10 Higher

MILK:

Milk futures have been taking a beating as underlying cash has been weakening. The extent of the weakness of underlying cash is uncertain but it seems the strong buying season may have run its course. There will be price fluctuations as buyers and sellers take care of business, but the market may not trend higher anytime soon. Milk output will slowly improve as time progresses. Cow numbers may hold steady with culling done as needed due to various reasons and not because of feed prices. Increasing production will keep sufficient supply readily available for bottling and manufacturing. Buyers of dairy products for end of the year demand have been more aggressive earlier than usual to secure supply and move it to locations ahead of time to ensure availability when needed.

CHEESE:

Cheese prices have declined significantly over the past week. Some think prices have declined to levels at which buyers may step back in to purchase supply more aggressively. The last time price fell below $2.00, the market bounced as buyers wanted to increase ownership. However, that was about two months ago when buyers were looking ahead to purchase for holiday demand. Holiday demand will continue, but buyers may not be as aggressive due to having supply already on hand.

BUTTER:

Price is expected to remain in a range with further upside limited. Buyers and sellers seem comfortable at the present price. There has been limited use of butter as a loss leader to bring consumers into stores. Retail stores may have limited supply available and are not inclined to offer it at a lower price and risk being sold out of product.

Wednesday Closing Dairy Market Update - Milk futures Continue to Slide

MILK

Milk production is slowly improving as cooler weather has improved cow comfort. Demand for fluid milk is holding well with retail sales steady. Cheese demand is variable depending on variety and location. Milk supply remains readily available in most cases leaving little concern over supply tightness. Spot milk prices are mixed slightly lower to slightly higher than class. The September Milk Production report indicates the trend for higher milk production than last year is solid with strong output per cow. Lower milk prices may result in increased culling again over time if feed prices remain high. However, with feed inventories replenished after harvest, the need to cull heavier will not be a concern for a few months until feel inventories decline. Farms will also benefit from payments from the Dairy Margin Coverage program if income over feed declines below the chosen coverage level. This will also minimize the need to step up culling due to higher feed prices.

AVERAGE CLASS III PRICES

3 Month:	$20.45
6 Month:	$19.91
9 Month:	$19.85
12 Month:	$19.87

CHEESE

Manufacturers of processed cheese indicate supplies are beginning to increase allowing for greater availability of product. This is what has put pressure on barrel prices over the past week. Buyers see no need to be aggressive through the end of the year and want to minimize the amount of inventory they will be carrying. Some cheese buyers are working on forward contracts for next year to ensure they will have product when it is needed. Demand will be uncertain moving through the end of the year.

BUTTER

Some butter manufacturers are increasing churning activity as they are able and have the cream available for churning. The decrease in ice cream manufacturing has improved the availability of cream but supply still is not abundant. This will keep butter supply from building anytime soon. Lower butter inventory has kept prices supported. There is a possibility that butter buying will begin to slow a little as the calendar moves into November.

OUTSIDE MARKETS SUMMARY

December corn declined 1.25 cents closing at $6.85. November soybeans slipped 0.25 cents closing at $13.8175 with December soybean meal down $6.90 per ton closing at $408.70. December wheat gained 5.75 cents closing at $8.4050. October live cattle declined $0.22 closing at $151.45. December crude oil jumped $2.59 ending at $87.91 per barrel. The DOW closed 2 points higher at 31,838 while the NASDAQ fell 228 points closing at 10,971.

Wednesday Midday Dairy Market Summary - Cash Weakness Continues

OUTSIDE MARKETS SUMMARY:

CORN:	Unchanged
SOYBEANS:	2 Higher
SOYBEAN MEAL:	$5.70 Lower
LIVE CATTLE:	$0.32 Lower
DOW JONES:	85 Points Higher
NASDAQ:	188 Points Lower
CRUDE OIL:	$2.57 Higher

MIDDAY MARKET UPDATE:

Block cheese price declined 4.25 cents closing at $1.9975 with one load traded. Barrel cheese price declined 2.50 cents closing at $1.98 with two loads traded. There was only an offer for a load of blocks remaining at the close of the trading period. It appears strong buying ahead for the holidays may have run its course. Dry whey price declined a penny to 43 cents with one load traded. Butter price declined 0.25 cents closing at $3.15 with one load traded. Grade A nonfat dry milk remained unchanged at $1.42 with three loads traded. Class III futures are 35 cents lower to 9 cents higher with November showing the greatest loss and May showing the only gain. May is higher due to just one contract trading so far today with that trade taking place early in the day. Class IV futures are 8-27 cents lower. Butter futures are 4.00 cents lower to 0.27 cents higher. Dry whey futures are unchanged to 0.02 cents higher.

NMPF Unanimously Endorses Marketing Order Modernization Plan

National Milk Producers Federation leadership Tuesday unanimously endorsed a proposal to modernize the Federal Milk Marketing Order milk-pricing system. The plan includes returns to the "higher of" Class I mover, discontinuing including barrel cheese in the protein component price formula. It extends the current 30-day reporting limit to 45 days on forward-priced sales of Nonfat Dry Milk and dry whey to capture more export sales in the USDA product price reporting. Additionally, the plan updates milk component factors for protein, other solids and nonfat solids in the Class III and Class IV skim milk price formulas. The plan develops a process to ensure make-allowances are reviewed more frequently through legislation directing USDA to conduct mandatory plant-cost studies every two years, and updates dairy product manufacturing allowances contained in the USDA milk price formulas. Any final proposal will be reviewed by the organization before it’s submitted to USDA to be considered for a federal order hearing.

Wednesday Morning Dairy Market Update - Further Price Weakness Expected

OPENING CALLS:

Class III Milk Futures:	Steady to 5 Lower
Class IV Milk Futures:	Steady to 5 Lower
Butter Futures:	1 to 2 Lower

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 2 Higher
Soybean Futures:	7 to 9 Higher
Soybean Meal Futures:	$2 to $3 Higher
Wheat Futures:	4 to 6 Higher

MILK:

Milk futures may continue to struggle as support to underlying cash may be waning. The activity of cash cheese over the past week has not been supportive with further weakness possible. Historically, there is strength during the month of October, which results in some of the highest prices of the year. However, the peak had been reached earlier this year as there was concern over milk supply later in the year. The fear of lower milk supply has not materialized and is actually moving in the other direction as milk production has exceeded the previous year over the past three months. Demand is being satisfied without difficulty, leaving buyers unconcerned over supply. This has eliminated the need for buyers to be aggressive on the daily spot market. This does not mean prices will continue to fall through the end of the year, but may continue the pattern of price increases being short lived.

CHEESE:

It is possible cheese prices may decline below $2.00 yet this week. Buyers are not aggressive on the daily spot market due to sufficient supply being available in the country.

BUTTER:

Price is not expected to fall significantly anytime soon, but it is also expected to see limited upside potential. High prices are having an impact on demand along with some consumers already having purchased supply ahead of time to avoid the talked about shortage that could develop. Churns have sufficient cream available but many struggle with having sufficient employees to increase production.

Tuesday Closing Dairy Market Update - South Dairy Trade Shows Lower Butter Prices

MILK

A major concern that is developing in the potential for further weakness of milk prices is continued high feed prices. There is potential for grain prices to hold or even increase further depending on total amount of grain harvested and demand. If milk prices continue to weaken, income over feed will decline. This will tighten margins for dairy operations quite significantly. The signup for the Dairy Margin Coverage program for 2023 is currently open and provides a nice addition to risk management for dairies. If margins tighten significantly over the next months, culling will likely increase again. South Dairy Trade reports were released today. This provides information on the amount of dairy products and prices moved through ports in Argentina and Uruguay. Argentina had 12,490.05 tons of dairy production moving to 27 destinations at an average price of $4,145.44 per ton during the first half of September. Whole milk powder price declined 6.4 percent from the previous report to $3,889.82 per ton or $1.77 per pound. Skim milk powder declined 5.8 percent to $3,811.06 per ton or $1.73 per pound. Semi-hard cheese declined 1.0 percent to $4,818.10 per ton or $2.19 per pound. Hard cheese increased 1.3 percent to $6,325.53 per ton or $2.87 per pound. Butter declined 3.7 percent to $4,974.67 per ton or $2.26 per pound. Dairy products moved through ports in Uruguay totaled 9,068.76 tons moving to 25 destinations at an average price of $4,294.83 per ton. Whole milk powder declined 2.7 percent to $4,95.32 per ton or $1.86 per pound. Skim milk powder jumped 9.1 percent to $4,266.39 per ton or $1.94 per pound. Semi-hard cheese declined 1.5 percent to $4,907.58 per ton or $2.23 per pound. Hard cheese gained 4.0 percent to $6,427.00 per ton or $2.92 per pound. Butter fell 8.3 percent to $5,250.17 per ton or $2.28 per pound.

AVERAGE CLASS III PRICES

3 Month:	$20.66
6 Month:	$20.08
9 Month:	$19.99
12 Month:	$20.00

CHEESE

Barrel price has not been below blocks since August 4. There were only three days during August were barrels drop below blocks before moving to an inverted market. Barrels have been above blocks quite a bit this year. Barrels have been in tighter supply with buying more aggressive. Much of the strong buying for the holidays might be wrapped up for now.

BUTTER

It is possible butter may begin to head lower. Not consistently, but the overall trend may be lower. A good amount of buying might have been accomplished already with fill in buying to satisfy orders continuing until the holidays.

OUTSIDE MARKETS SUMMARY

December corn gained 4.75 cents closing at $6.8625. November soybeans gained 10 cents closing at $13.82 with December soybean meal up $6.90 per ton closing at $415.60. December wheat declined 4 cents ending at $8.3475. October live cattle gained $0.07 closing at $151.67. December crude oil gained $0.74 closing at $85.32 per barrel. The DOW gained 337 points ending at 31,837 while the NASDAQ gained 247 points closing at 11,199.

Tuesday Midday Dairy Market Update - Continued Weakness of Cheese, Butter

OUTSIDE MARKETS SUMMARY:

CORN:	5 Higher
SOYBEANS:	12 Higher
SOYBEAN MEAL:	$7.20 Higher
LIVE CATTLE:	Unchanged
DOW JONES:	243 Points Higher
NASDAQ:	188 Points Higher
CRUDE OIL:	$0.62 Higher

MIDDAY MARKET UPDATE:

Block cheese price declined 2 cents, closing at $2.04 with no loads traded. Barrel price declined 5.50 cents, closing at $2.0050 with one load traded. There was an uncovered offer remaining in each at the close of trading. Barrels are more available than they had been as buyer interest has decreased with much of the buying for the holidays now having been accomplished. Barrel weakness may lead blocks lower as it did Tuesday. Dry whey price remained unchanged at 44 cents with no loads traded. Class III futures in closer months turned lower contracts 3 to 31 cents lower through January with later contracts steady to 10 cents higher. Butter price declined 3.75 cents, closing at $3.1525 with one load traded. Grade A nonfat dry milk price remained steady at $1.42 with no loads traded. Class IV futures are 11 cents lower to 9 cents higher. Butter futures are 1.22 to 4.00 cents lower. Dry whey futures are unchanged to 1.50 cents lower.

Tuesday Morning Dairy Market Update - Traders Show No Reaction to Inventory Report

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	3 to 4 Lower
Soybean Futures:	Steady to 2 Lower
Soybean Meal Futures:	$1 to $2 Higher
Wheat Futures:	5 to 8 Lower

MILK:

The September Cold Storage report did not influence overnight trading as no activity was seen. The report was neutral to slightly bearish with traders feeling comfortable where they are with their positions. Barrel pride declining to the same level as blocks has traders searching and waiting for further price direction. With the recent major dairy reports being neutral to bearish, there is little reason to believe there will be much upside price potential for the foreseeable future. Milk supply is sufficient for bottling and manufacturing leaving buyers unconcerned over supply through the end of the year. Trading activity is expected to be limited unless there is a substantial price change in underlying cash.

CHEESE:

Demand may have slowed for barrel cheese which may move price back below blocks. This may be more positive from an industry standpoint, but it is not necessarily supportive to prices. Buyers remain able to purchase supply from regular channels reducing their need to come to the spot market.

BUTTER:

There is continued talk of a butter shortage. The cold storage report indicates that will not be the case as there is still sufficient supply in inventory. The inventory draw in September was rather light with a decrease of only 11.0 million pounds. High price may be having an impact. If there was a real fear of a butter shortage, butter price would not be at the current level, but would be substantially higher as the market would want to slow demand.

Monday Closing Dairy Market Update - Cheese Inventory Remains Above a Year Ago

MILK

Class IV milk futures posted some nice gains even though butter price slipped, and nonfat dry milk price remained unchanged. Class III milk futures were mixed. There was little to give traders are real direction for the market moving forward. Milk production is improving seasonally with milk being available for both bottling and manufacturing. The industry is not concerned over a supply shortage as the increasing buying for holiday demand is being met without buyers having to come to the spot market aggressively. There is sufficient supply in the country to take care of buyers' needs. This leaves limited need to come to the daily spot market to look for product. The cost of production is high and with the current prices in the futures market moving through the end of the year and into next year, it does not provide a very profitable outlook.

AVERAGE CLASS III PRICES

3 Month:	$20.83
6 Month:	$20.20
9 Month:	$20.07
12 Month:	$20.04

CHEESE

American cheese inventory increased 1.5 million pounds in September totaling 843.0 million pounds according to the cold storage report. It is usual to see inventory increase during this time of year when buying becomes more active and more aggressive. Inventory is about right in line with a year ago. Swiss cheese inventory increased 1.9 million pounds totaling 23.1 million pounds and 5% above a year ago. It is noteworthy that inventory in August was 6% below a year ago with September inventory 5% above a year ago. Other cheese stocks declined 19.1 million pounds totaling 620.3 million pounds and remains 6% above a year ago. Total cheese inventory declined 38.1 million pounds totaling 1.484 billion pounds, up 4% from a year ago.

BUTTER

Butter inventory declined 11.0 million pounds totaling 267.3 million pounds. This is 18% below a year ago. The August report showed inventory 22% below a year earlier. Even with the decline, supply may be able to move closer to where they were a year earlier by the end of the year. The decrease in inventory for the month was rather light.

OUTSIDE MARKETS SUMMARY

December corn declined 2.75 cents closing at $6.8150. November soybeans fell 23.50 cents ending at $13.72 with December soybean meal down $9.20 per ton closing at $408.70. December wheat declined 12 cents closing at $8.3875. October live cattle gained $1.12 closing at $151.60. December crude oil declined $0.47 ending at $84.58 per barrel. The DOW gained 417 points ending at 31,500 while the NASDAQ gained 93 points closing at 10,953.

Monday Midday Dairy Market Summary - Block/Barrel Spread Comes Together

OUTSIDE MARKETS SUMMARY:

CORN:	3 Lower
SOYBEANS:	22 Lower
SOYBEAN MEAL:	$9.20 Lower
LIVE CATTLE:	$1.12 Higher
DOW JONES:	335 Points Higher
NASDAQ:	24 Points Higher
CRUDE OIL:	$0.55 Lower

MIDDAY MARKET UPDATE:

Block cheese price increased 0.25 cent, closing at $2.06 with one load traded. Barrel cheese declined 3 cents, closing at $2.06. This is the first time in a long time that blocks and barrels were at the same price. This does not necessarily mean anything specifically for market direction. It indicates barrel demand may have slowed as much of the buying push for the upcoming holidays has been completed. This may trickle down across the whole complex as the month of October comes to a close. Butter price declined a penny, closing at $3.19 with no loads traded. Grade A nonfat dry milk price remained unchanged at $1.42 with no loads traded. Dry whey price was unchanged at 44 cents with no loads traded. Class III futures are 11 cents lower to 3 cents higher. Class IV futures are 4 cents lower to 18 cents higher. Butter futures are 1.27 to 5.02 cents higher. Dry whey futures are steady to 0.22 cent lower. USDA will release the September Cold Storage report Monday afternoon. A decrease of inventory is expected in all categories.

Monday Morning Dairy Market Update - Weakness May Continue

OPENING CALLS:

Class III Milk Futures:	5 to 8 Lower
Class IV Milk Futures:	Steady to 5 Lower
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	3 to 5 Lower
Soybean Futures:	12 to 15 Lower
Soybean Meal Futures:	$2 to $4 Lower
Wheat Futures:	6 to 8 Lower

MILK:

There is little support for milk futures as underlying cash markets are not trending in any direction. Improving milk production will keep a sufficient supply of milk for bottling and manufacturing without any supply tightness. Under the current market situation, prices are not expected to see much upside potential. October is a strong period of demand as cheese and butter are purchased to prepare for the holiday season. Buying will remain strong but not as aggressive during November and December. Buyers have been purchasing ahead for quite some time already and have been able to purchase much of what they need without difficulty. Milk production will continue to improve as time progresses. Production per cow continues to increase significantly over a year ago.

CHEESE:

The block/barrel price spread come together significantly last week which may indicate the strong demand for barrel cheese has slowed and supply is more readily available for demand. USDA will release the September Cold Storage report today which is expected to show a decrease of cheese in storage from August. However, supply is expected to remain above a year ago.

BUTTER:

Butter has been in the news recently as consumers see high prices and there have been some concerns over a butter shortage. This may result in the impression that there is a shortage as consumers stock up more than usual in fear of not being able to purchase it when they want it. This leaves store shelves with favorite brands not always available. This feeds on itself like some of the shortages that have been seen since Covid began. Consumers purchase what they need and then some to make sure they have extra on hand. Inventory is significantly below a year ago and is not expected to catch up through the rest of the year. However, production is ongoing.

Friday Closing Dairy Market Update - Cattle Slaughter Declines in September

MILK

Milk futures made a valiant attempt to move higher earlier this week fueled by the strength of barrel prices. However, the rally was short-lived as has been the pattern for the past few months. If the market cannot break out of this pattern during this time of year, the price outlook for the rest of the year and into next year does not look very promising. Not only will milk prices have a difficult time trending higher, but higher food prices will also have an impact. Fluid milk demand has been stable with cheese and butter demand somewhat variable. The real concern will be once the greater part of holiday buying is finished; regular demand may not be supportive to the market. Cow numbers declined 2,000 head in September from the previous month according to the milk production report. The September Livestock Slaughter report showed dairy cattle slaughter down 4,000 head from September 2021 at 260,500 head and 5,600 head below August. Farms may have culled out much of what they wanted to prior to this time of year and/or they are holding onto cows due to increased feed supplies and relatively good milk prices.

AVERAGE CLASS III PRICES

3 Month:	$20.82
6 Month:	$20.21
9 Month:	$20.09
12 Month:	$20.06

CHEESE

For the week, blocks increased 0.75 cents with one load traded. Barrels increased 3.50 cents with 13 loads traded. Dry whey slipped 0.25 cents with one load traded. The movement of prices took place with limited activity. Buyers and sellers are accomplishing most of their business out in the country with limited need to come to the spot market. This pattern is expected to continue as more cheese is available through regular channels. There are some reports from some manufacturers that demand is good, and they are having difficulty keeping up with orders. However, cheese supply is readily available overall.

BUTTER

For the week, butter price increased 2.50 cents with no loads traded. It is very unusual for no trading activity to develop during the week. It has been a long time since there has been a week with no loads traded in the spot market. Much of the year has shown strong weekly trading volume. Grade A nonfat dry milk declined 7 cents with 13 loads traded. Price is now at the lowest level it has been since October 5, 2021, with further weakness expected. USDA will release the September Cold Storage report on Monday.

OUTSIDE MARKETS SUMMARY

December corn gained 0.25 cents closing at $6.8425. November soybeans gained 4 cents closing at $13.9550 with December soybean meal up $4.60 per ton closing at $417.90. December wheat gained 1.50 cents ending at $8.5075. October live cattle gained $0.70 ending at $150.47. December crude oil increased $0.54 closing at $85.05 per barrel. The DOW jumped 749 points closing at 31,083 while the NASDAQ gained 245 points closing at 10,860.