MILK
Milk production increases seem to be tempering and remaining somewhat flat. Production may hold near current levels for a period as winter wheat sets in and cows settle down with consistent feed and routine. Some manufacturing plants indicate milk for Class II production is heavy while Class III supplies are sufficient but not burdensome. There certainly is no shortage of milk supply. Class I demand is strong as regular demand is being filled and specialty holiday fluid milk products are being processed. Milk futures closed mixed as underlying cash showed little reason for traders to get excited about the market. The price increase of block cheese does generally result in some upward bias even though the decline of barrels offset the gain. Class IV futures are not carrying much premium over Class III futures are they had been for much of the year. Traders anticipate butter and cheese prices to move more in line with one another as 2023 progresses.
AVERAGE CLASS III PRICES
| 3 Month: | $19.74 |
| 6 Month: | $19.70 |
| 9 Month: | $19.84 |
| 12 Month: | $20.00 |
CHEESE
Plants in the Midwest that need more milk for manufacturing are able to purchase spot loads of milk for as much as $6.00 under class. This might become worse through the end of the year as bottlers will divert milk due to school closing for a few weeks and manufacturing plants running on lighter schedules in some instances. Cheese demand has been holding well but may slow into the end of the year and buyers have purchased what they need to carry through. Demand will be a wild card early next year. the Federal Reserve increased the interest rate 0.50% which is finally an indication they believe inflation is turning the corner and becoming under control.
BUTTER
Butter demand remains strong overall, but some plants indicated new retail orders have backed off a bit. Churning is active with plants meeting demand as well as attempting to build inventory. Inventory may move closer to where it was last year but will not be able to close the gap with inventory at the beginning of 2023 significantly lower than a year earlier.
OUTSIDE MARKETS SUMMARY
March corn declined 3 cents closing at $6.5050. January soybeans gained 2.50 cents closing at $14.8335 with January soybean meal up $7.80 per ton closing at $460.10. March wheat declined 1.50 cents ending at $7.4925. December live cattle declined $0.40 ending at $154.50. January crude oil gained $1.89 ending at $77.28 per barrel. The Dow declined 142 points closing at 33,965 while the Nasdaq declined 86 points closing at 11,171.
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