MILK
Milk futures fell apart as barrel cheese and butter prices fell. December and January Class III futures closed at new contract lows, further dimming the outlook for milk prices through the end of the year and next year. Milk futures are just following underlying cash and are not really being manipulated by traders.
The futures are following rather than leading the market. Milk production is sufficient for demand and it appears to be overwhelming to the market. However, spot milk is still priced above class which does not indicate an overabundant supply.
The issue is that manufacturers continue to move products to the market rather than allowing them to build up. Sellers continue to lower offers rather than hold for a price bounce that may not develop for a period. They do not want to pay for storage and carry supply in storage longer than necessary in the current market environment. Holding it may not net any benefits.
USDA will release the October milk production report on Monday. USDA is being urged to address the milk carton shortage and help with the ongoing situation that may have an extended duration. It is unclear what that assistance could be if they become involved.
AVERAGE CLASS III PRICES
| 3 Month: | $16.85 |
| 6 Month: | $17.28 |
| 9 Month: | $17.64 |
| 12 Month: | $17.91 |
CHEESE
For the week, blocks remained steady at $1.60 with 14 loads traded. Barrel cheese declined 9 cents with nine loads traded. Dry whey increased 1.25 cents with 10 loads traded. On Friday, barrels declined 11 cents, the largest one-day decline since Jan. 20, 2021. This puts substantial pressure on the market not only as a result of the current impact on milk prices but also on the weakness of milk prices in the longer term.
BUTTER
Butter declined 11 cents for the week with 10 loads traded. Grade A nonfat dry milk slipped 0.75 cent with 13 loads traded. It is uncertain how much further price will decline. It has fallen in line with where the current futures prices are and have been for quite some time as the market already anticipated prices would fall.
OUTSIDE MARKETS SUMMARY
December corn closed down 7.75 cents per bushel at $4.6700, January soybeans closed down 20 cents at $13.4025 and December soybean meal closed down $13.50 per ton at $453.30. December Chicago wheat closed down 2.75 cents at $5.5075. February live cattle closed up $1.48 at $176.80. January crude oil is up $2.99 per barrel at $76.08. The Dow Jones Industrial Average is up 2 points at 34,947 and the NASDAQ is up 12 points at 14,125.
