Monday Closing Dairy Market Update - Class III Milk Futures Mostly Higher

MILK

Class III milk futures did not have the bounce that was expected due to the bullish nature of the September Cold Storage report, but at least it was supported. The steady cheese prices also kept the market from declining. Traders may be unwilling to pressure the market much more at these prices because of the time of year. Demand will need to improve, or the upside might be limited. Fluid milk demand has been strong and cheese demand steady. There have been some reports of increasing cheese demand with plants indicating they are sold out of supply and are just able to keep up with demand. However, this is not widespread otherwise prices would be higher and inventory lower than it is. Lower corn prices generally correlate to lower milk prices. This might be some of what we are currently seeing as culling has slowed down and milk production per cow has risen.

AVERAGE CLASS III PRICES

3 Month:	$20.98
6 Month:	$20.38
9 Month:	$20.03
12 Month:	$19.91

CHEESE

Steady cheese prices on the spot market left traders guessing price direction. It did provide some minor support to Class III futures, but prices will need to increase before much more upside will be realized. Cheese production is steady and is moving to the market. Inventory is declining and running 8% below a year ago. It is not expected to increase much through the end of the year. Buyers feel comfortable with the supply.

BUTTER

The butter price is likely to have limited upside potential and is expected to remain in a sideways price range through the end of the year. Inventory is declining but at a slower pace than usual. Retail demand is showing some increase while food service demand is lighter than expected.

OUTSIDE MARKETS SUMMARY

December corn closed down 4.50 cents per bushel at $4.1075, November soybeans closed down 13.75 cents at $9.7400 and December soybean meal closed down $1.00 per ton at $304.80. December Chicago wheat closed down 10.25 cents at $5.5875. December live cattle closed up $0.13 at $189.28. December crude oil is down $4.40 per barrel at $67.38. The Dow Jones Industrial Average is up 273 points at 42,388 with the NASDAQ is up 49 points at 18,567.