MILK
January Class III contracts held on to $19.00 but did trade below that level for a brief period today. It certainly seems milk prices may be headed lower. When end of the year demand slows and moves to regular ongoing demand, there may be further slowing due to high food prices. Dairy demand may fair better than demand for other foodstuffs which may limit the downside. Increasing milk production with output running above year-earlier levels will need strong demand to keep production from building inventory. Cow numbers are expected to hold through the winter as feed is plentiful with most of it being of good quality. However, with higher cost of production and once feed supply dwindles, if milk prices are lower than they currently are, there could be a surge in culling again. For now, cow numbers are higher than they were a year ago.
AVERAGE CLASS III PRICES
| 3 Month: | $19.55 |
| 6 Month: | $19.56 |
| 9 Month: | $19.73 |
| 12 Month: | $19.92 |
CHEESE
It may be difficult for cheese to find much strength with prices not likely to trend higher anytime soon. The hope is that prices will be able to hold, but increased production and slowing demand could have a negative impact on prices. American cheese inventory on the October report showed stocks down 1% from a year ago. However, November may have seen a bump in inventory as milk production was higher and cheese output increased.
BUTTER
Buyers and sellers are running from one side to the other quickly creating the extreme volatility. When buyers need to purchase to fill orders, they will step in aggressively. Higher prices will trigger seller interest as they want to move production as quickly as possible at the higher price. Sellers are not interested in holding on to supply anticipating higher prices but would rather sell to reduce exposure.
OUTSIDE MARKETS SUMMARY
December corn closed 6.50 cents higher at $6.4135. January soybeans fell 23.35 cents closing at $14.6050 with December soybean meal down $23.40 per ton closing at $448.30. December wheat gained 20.25 cents closing at $7.33. December live cattle gained $0.72 ending at $154.40. January crude oil gained $2.15 ending at $73.17 per barrel. The Dow gained 529 points closing at 34,005 while the Nasdaq gained 139 points closing at 11,144.
