MILK
Milk futures retraced today but remained at good prices. Traders remain optimistic that there will be limited downside price potential. The time of year suggests higher prices will unfold as demand improves. Milk production continues to run lower than a year ago and may remain that way. Culling remains lower than a year ago with farms keeping cows in the herd. Although it may improve cow numbers or at least keep them from continuing to go lower, it may not improve milk production greatly. These may be lower producers and older cows that may not have the genetic potential of replacement heifers. That may limit the growth of milk production. It is uncertain whether demand will improve sufficiently to tighten the milk supply. Bottling for school accounts is absorbing substantial volumes of milk with less available for manufacturing. This is seasonal and not unexpected. Manufacturers had already prepared for this by increasing plant inventories for contracted orders. Spot milk in the Midwest is reported at prices ranging from $0.50 - $2.25 over class.
AVERAGE CLASS III PRICES
| 3 Month: | $21.72 |
| 6 Month: | $21.34 |
| 9 Month: | $20.54 |
| 12 Month: | $20.13 |
CHEESE
Manufacturers are reporting that higher cheese prices have not resulted in buyer resistance. Most indicated sufficient milk for cheese production with plants running on full schedules. The recent price swings in the spot market have been unprecedented leaving traders uncertain of the long-term price direction. However, the market may be supported by a continued upward bias.
BUTTER
Even though the butter supply is higher than a year ago, demand is expected to reduce inventory and move it closer to the level it was a year ago. World demand is improving, which may increase exports. Domestic demand shows signs of improvement as the fall and holiday season approaches. Price is expected to see continued support.
OUTSIDE MARKETS SUMMARY
December corn closed down 2.00 cents per bushel at $3.9075, November soybeans closed down 9.50 cents at $9.7700 and December soybean meal closed down $3.90 per ton at $308.30. December Chicago wheat closed up 6.00 cents at $5.4150. October live cattle closed down $0.78 at $178.63. October crude oil is down $1.01 per barrel at $74.52. The Dow Jones Industrial Average is down 159 points at 41,091 with the NASDAQ down 199 points at 17,556.
