MILK
The bounce of Class III milk futures was again short lived with prices moving back to the levels they were on Monday. This is the result of the weakness of cheese prices. The inability of cheese prices to trend higher over the past few months leaves any further price strength unlikely for a time. Hope for holiday demand to reduce inventory and tighten supply has dimmed and likely will not materialize. Milk production continues to improve with components increasing. Cow slaughter has not increased as was anticipated even though beef prices were strong. Now that beef prices are weakening, it is unlikely culling will increase unless low milk prices force farmers to cull for income purposes. Spot milk prices this week range from 0.25 cent to $1.00 over class. This is similar to a year other than the low end of the price range was a negative 0.50 cent. Prices are expected to weaken a bit over the next week.
AVERAGE CLASS III PRICES
| 3 Month: | $17.17 |
| 6 Month: | $17.57 |
| 9 Month: | $17.87 |
| 12 Month: | $18.08 |
CHEESE
It is interesting to note that demand has slowed in some instances for the food service industry. Higher menu prices have reduced patronage as higher interest, and the cost of other goods and services continues to rise. People preparing the Christmas might reduce eating out as they shop for gifts and look to other areas to purchase food or spend their money. Cheese production is steady and sufficient to meet current demand.
BUTTER
Price dropping back to a new low since the high was reached does not bode well for the market. Buyers seem to have sufficient on hand and can wait for lower prices before picking up supplies. High butter price does not seem to have negatively impacted consumer demand, but increased cream supplies and increased churning along with substantially lower export demand has inventory above a year ago.
OUTSIDE MARKETS SUMMARY
December corn closed up 4.00 cents per bushel at $4.7475, January soybeans closed down 24.75 cents at $13.6025 and December soybean meal closed down $2.40 per ton at $466.80. December Chicago wheat closed down 7.00 cents at $5.5350. February live cattle closed down $3.45 at $175.33. December crude oil is down $3.72 per barrel at $72.94. The Dow Jones Industrial Average is down 46 points at 34,945 with the NASDAQ is up 10 points at 14,114.
