MILK
Class III milk futures managed to close steady to higher with strong volume in the January contract. Traders seem to think price will remain choppy through the rest of the year and underlying prices movement will continue to move up and down on a daily basis without establishing a trend. December Class IV futures showed a price move that has never been seen before with price adjusting 40 cents higher based on the numbers on the weekly AMS report. Many times, prices will adjust in the nearby month due to weekly prices being higher or lower than traders anticipated, but this move was the exception. Milk is available with some of the largest discounts for spot milk being seen in the Central region as milk output continues to increase. Some input prices are declining but generally cost of production remains high. This will limit expansion with cow numbers increasing within current facilities. Milk supply will also increase due to increased production per cow.
AVERAGE CLASS III PRICES
| 3 Month: | $19.82 |
| 6 Month: | $19.77 |
| 9 Month: | $19.90 |
| 12 Month: | $20.05 |
CHEESE
Demand from retail and food service is steady in most areas. Some manufacturers report orders are beginning to slow. Barrel cheese is seeing less demand than blocks and the reason the block/barrel spread has moved back to 32 cents. Barrel price has nearly eliminated the gain realized during August and September. Price has now fallen within 2.50 cents of the lower established August 4. A move below that level would move price back to levels last seen in January. In the meantime, there has been quite a bit of volatility with price moving very high during the springtime. Sustained price strength may be difficult to come by anytime soon as demand slows seasonally.
BUTTER
Butter production has been increasing as cream has been more available and plants are selling less to the open market, but rather are churning it themselves. Many would like to see butter inventory increase to provide a greater cushion of supply. Butter price is expected to slip through the end of the year but will remain historically high.
OUTSIDE MARKETS SUMMARY
March corn gained 3 cents closing at $6.5350. January soybeans declined 8.75 cents closing at $14.7350 and January soybean meal declined $4.80 ending at $455.30 per ton. March wheat increased 8 cents closing at $7.5725. December live cattle declined $0.45 ending at $154.05. January crude oil declined $1.17 ending at $76.11 per barrel. The Dow fell 764 points closing at 764 while the Nasdaq lost 360 points closing at 10,811.
