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.
