MILK
Milk futures were under pressure the last half of the week as weakness began filtering into the market. Traders are mixed as to how they view the activity of the week. Some were reluctant to sell out of positions thinking prices will find support as orders will need to be filled for increased holiday demand. Others have been quick to exit their short-term positions. The weakness of butter increased the bearishness. Milk futures have had a nice run higher following the strength of underlying cash. Prices fell substantially one month ago seemingly for no apparent reason other than aggressive selling in the cash market moving buyers to the sidelines. Now, it is a month later and a decline in prices would not be out of the ordinary. Fill-in buying that takes place as orders are placed may drive prices higher until those orders are filled. Cash prices then decline with milk futures following. There is sufficient milk available to the market supplying increased cheese and butter production. Milk production is expected to remain strong through the end of the year and likely through the first quarter of next year. Cow numbers are expected to hold with culling taking place only as needed.
AVERAGE CLASS III PRICES
| 3 Month: | $21.06 |
| 6 Month: | $20.63 |
| 9 Month: | $20.48 |
| 12 Month: | $20.45 |
CHEESE
Cheese prices diverged this week. Blocks increased 3.25 cents with no loads traded. Barrels fell 13.50 cents with eight loads traded. Dry whey price remained unchanged at 44 cents with two loads traded. Buyers of barrels have sufficient supply on hand and were purchasing as the price declined. Demand for barrel cheese for the holidays has generally been met. Price weakness is reflecting current supply and demand. The block/barrel spread moved to an inverted 30.50 cents. This is unusual for this time of year.
BUTTER
For the week, butter fell 10.50 cents with seven loads traded. Price fell 13 cents today with five loads traded. earlier gains during the week limited the decline. The movement today has brought back into focus the weakness of a month ago. Nonfat dry milk price slipped 0.25 cents with 16 loads traded. It is likely butter has turned the corner with price not likely to rebound very much through the end of the year. The weakness today will send buyers to the sidelines unless some immediate orders will need to be filled.
OUTSIDE MARKETS SUMMARY
December corn gained 0.25 cents closing at $6.6775. January soybeans increased 11.25 cents closing at $14.2825 with December soybean meal up $4.70 per ton closing at $410.40. December wheat declined 3.50 cents closing at $8.0325. December live cattle gained $0.32 closing at 153.07. December crude oil declined $1.56 closing at $80.08 per barrel. The Dow gained 199 points closing at 33,746 while the Nasdaq gained one point ending at 11,146.
