MILK
Milk futures showed strength through the morning prior to spot trading and held that strength after the trading session as block cheese and butter prices increased. However, as the afternoon unfolded, pressure slowly began to be put on the market. Class III futures closed mixed but saw further pressure after the market was settled for the day and electronic trading continued. This would indicate selling pressure might be evident in overnight trade. There was no specific reason triggering more aggressive selling other than potential nervousness over current price levels. The block cheese price increase during August/September was 33.50 cents. The price increase now has been 29.50 cents and may be the cause for greater caution. The Global Dairy Trade auction trade weighted average today increased 2.4%. Anhydrous milk fat increased 2.7% to $5,711 per metric ton or $2.59 per pound. Butter declined 0.8% to $4,829 per metric ton or $2.19 per pound. Cheddar cheese price declined 1.3% to $4,746 per metric ton or $2.15 per pound. Lactose declined 4.6% to $1,236 per metric ton or $0.56 per pound. Skim milk powder increased 3.1% to $3,057 per metric ton or $1.39 per pound. Whole milk powder gained 3.1% to$3,397 per metric ton or $1.54 per pound.
AVERAGE CLASS III PRICES
| 3 Month: | $21.21 |
| 6 Month: | $20.83 |
| 9 Month: | $20.65 |
| 12 Month: | $20.61 |
CHEESE
Overall demand seems to be holding well from both the food service industry as well as retail. Some areas are reporting some slowing but it does not appear to be widespread. However, it is unclear as to what level of demand is being steady in comparison to a year ago. That will be more evident when we see the cold storage report for the month of October when it is released on Tuesday next week. If inventory increases or decreases less than average, it might mean demand is reduced compared to a year ago.
BUTTER
Butter production has been slowly increasing but only as cream supply is available. Some areas of the country indicate cream supplies are more available than others. The rebound of price from the low indicates buyers remain aggressive with purchases to fill orders. Buyers are likely not purchasing to build inventory at this level as the anticipation price may decrease after the holiday demand is finished. Butter futures still hold a discount to cash in the anticipation of weakness.
OUTSIDE MARKETS SUMMARY
December corn gained 9.50 cents closing at $6.6675. January soybeans gained 16.75 closing at $14.5725 with December soybean meal up $3.90 per ton closing at $409.90. December wheat gained 9.75 cents ending at $8.2825. December live cattle declined $0.30 closing at $151.27. December crude oil increased $1.05 ending at $86.92 per barrel. The Dow closed 56 points higher at 33,593 while the Nasdaq gained 162 points closing at 11,358.
