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.
