MILK
Milk futures could not remain lethargic as they generally have been so far this week even though barrel cheese price increased. Underlying cash prices today spurred short covering as traders became nervous over upside potential. However, it seems it might have been tied mostly to short cover due to limited trading volume. Generally, a strong movement in the market will result in large trading volume as there is short covering and new buying interest. Whether this will last remains to be seen tomorrow or over the next few days. Today December Class III futures jumped 81 cents moving closer to $20.00. The rest of the contracts posted double-digit gains. Class IV futures were a bit more reluctant even though butter and nonfat dry milk prices increased. Double-digit gains were confined to December through March contracts. Milk production is increasing with components also on the rise. Spot prices continue to hold on both sides of class with prices 50 cents below or 50 cents above. Cheese production has increased as more milk is becoming available to the market.
AVERAGE CLASS III PRICES
| 3 Month: | $20.06 |
| 6 Month: | $19.92 |
| 9 Month: | $19.93 |
| 12 Month: | $19.92 |
CHEESE
Cheese demand is reported as steady in the food service industry. Retail demand is slowing to some extent in many areas. Some have indicated it is slowing more than expected. However, that depends on the level of expectations that were had. Some forecasts may have been rather bullish based on how early demand was during the year. Manufacturers have sufficient milk supply to keep plants running at steady production levels. Blocks moving back above $2.00 was a bit of a surprise. This was no magic number other than it being just a psychological level and a level it has been below the past two weeks.
BUTTER
Churning is increasing as plants are able due to cream supplies increasing. This has not caused the sharp decline of price, but it may eventually increase inventory to some degree. The bounce today was buyers taking advantage of the low price. Spot trading activity was limited. Spot loads of butter have become more available recently which takes some of the edge away from the market.
OUTSIDE MARKETS SUMMARY
December corn declined 8.25 cents closing at $6.7925. November soybeans declined 13.25 cents closing at $14.2675 with December soybean meal down $10.20 per ton ending at $414.30. December wheat declined 5.50 cents closing at $8.4050. December live cattle gained $0.55 closing at $151.95. December crude oil declined $1.83 closing at $88.17 per barrel. The Dow lost 147 points ending at 32,001 while the Nasdaq declined 182 points closing at 10,343.
