MILK
November and December Class III futures moved near the mid-$21.00 range after falling back from that level on Friday. There is a strong potential for further gains on Friday as there were quite a few unfilled bids that remained at the close of spot trading for butter and barrel cheese. At the worst, the market may move in a sideways pattern for a time. More aggressive buying interest in cheese and butter would further support milk futures. However, traders will be cautious as the upside price potential may be limited due to available supplies. California continues to struggle with increasing cases of bird flu in dairy cattle. It is uncertain how the impact it will have on milk supply and milk prices. High temperatures are likely to have a greater impact on milk production. The cattle infected with bird flu may have a greater risk of dying due to the flu virus combined with the hot weather. The virus itself usually does not kill the cows.
AVERAGE CLASS III PRICES
| 3 Month: | $21.88 |
| 6 Month: | $21.10 |
| 9 Month: | $20.56 |
| 12 Month: | $20.28 |
CHEESE
Some reports indicate retail demand is improving but not enough to generate any real excitement over supplies. Cheese demand should improve but cheese availability may keep prices from moving much higher unless both production and supplies tighten. The strong increase in the barrel cheese price today and the number of unfilled bids remaining at the close suggests further upside potential for the barrel price on Friday. The hope is for blocks to follow barrels providing support to the market.
BUTTER
It is a testament to good demand that the butter price has increased in the past two days despite the heavy volume of butter offered on the spot market. Butter manufacturing is strong with plentiful cream supplies. The cold storage report next week is expected to show significantly higher inventory than a year ago. The upside potential of the butter price may be limited.
OUTSIDE MARKETS SUMMARY
December corn closed up 2.00 cents per bushel at $4.0675, November soybeans closed up 8.75 cents at $9.8875 and December soybean meal closed up $4.40 per ton at $318.10. December Chicago wheat closed up 4.50 cents at $5.8950. December live cattle closed down $0.43 at $186.18. November crude oil is up $0.32 per barrel at $70.71. The Dow Jones Industrial Average is up 161 points at 43,239 with the NASDAQ up 7 points at 18,374.
