Tuesday Closing Dairy Market Update - Milk Prices Move Without Solid Direction

MILK:

Milk futures took a beating due to weakness of spot prices. Class III futures might move down to retest the recent lows. The outlook is for milk prices to continue to chop around for much of this month. The inability of underlying cheese prices to trend higher and break out of the range is concerning for this time of year. This will keep traders cautious as once holiday demand is mostly filled, there may not be much to support prices at current levels. Milk production is keeping up with demand and is slowly improving. Increasing components will improve cheese yield. Milk production per cow is strong and continues to improve with levels substantially higher than last year. USDA will release the World Agricultural Supply and Demand report tomorrow which will provide their estimates on milk production, milk prices and dairy product prices for this year and next year. This report is not a market mover, but it is used to provide trend. The report is expected to have a greater impact on feed prices.

AVERAGE CLASS III PRICES:

3 Month:	$21.21
6 Month:	$20.85
9 Month:	$20.77
12 Month:	$20.74

CHEESE:

Cheese prices moved very little during spot trading, but the slight decline in barrels had a significant impact on Class III futures. Buyers and sellers are doing business without much fanfare with prices continuing to fluctuate. Even with the higher demand period of the year, traders have little to get excited about as there is sufficient supply available reducing the need for buyers to come to the spot market.

BUTTER:

There seems to be some price resistance for the time being, but price continues to remain very high. Demand has slowed in some retail markets as consumers have slowed purchases. However, the holiday season will keep supply from building with the year expected to end with substantially lower stocks than the year before. USDA will likely raise their expectation for butter price on the World Agricultural Supply and Demand report tomorrow.

OUTSIDE MARKETS SUMMARY:

December corn declined 5.25 cents closing at $6.93. November soybeans gained 2.25 cents closing at $13.7625 with October soybean meal down $0.30 per ton closing at $410.40. December wheat fell 37 cents closing at $9.01. October live cattle closed $1.10 higher at $145.80. November crude oil fell $1.78 per barrel closing at $89.35. The DOW gained 36 points closing at 29,239 while the NASDAQ fell 116 ending at 10,426.