MILK:
Class III milk futures showed life today as the strength of cheese and butter prices triggered short covering and renewed short-term buying interest. Futures showed further strength after the markets were settled for the day, indicating stronger futures may be possible in the overnight session. Traders are not convinced that this signals a change in trend as higher prices were confined to closer months with December and January showing the greatest trading volume. Class IV futures did not show the same sentiment as most contracts showed weakness.
The Global Dairy Trade Auction trade-weighted average showed an increase of 1.2%. The average price was $4,193 per metric ton with 33,630 metric tons sold. The anhydrous milk fat price slipped by 0.5% to $7,583 per metric ton or $3.44 per pound. Butter fell 5.2% to $6,680 per metric ton or $3.03 per pound. Buttermilk powder declined 2.6% to $3,152 per metric ton or $1.43 per pound. The cheddar cheese price declined by 3.2% to $2.12 per pound. Lactose jumped 7.7% to $910 per metric ton or $0.41 per pound. Mozzarella declined 4.5% to $4,120 per metric ton or $1.87 per pound. Skim milk powder declined by 1.0% to $2,848 per metric ton or $1.29 per pound Whole milk gained 4.1% to $3,9844 per metric ton or $1.18 per pound.
AVERAGE CLASS III PRICES:
| 3 Month: | $18.85 |
| 6 Month: | $18.87 |
| 9 Month: | $18.78 |
| 12 Month: | $18.74 |
CHEESE:
Sellers of cheese were not as aggressive today allowing buyers to push prices higher. Higher prices are likely to increase selling interest as steady cheese output keeps sufficient supply available to the market. Inventory is below a year ago but is not a concern as the cheese supply is readily available for demand. This may limit the upside price potential.
BUTTER:
Butter is similar to cheese as the upside price potential is limited. The difference in butter is that inventory is higher than a year ago and will limit the upside price potential. Butter is expected to show further weakness before the end of the year as lower prices are trying to stimulate greater demand. The price decline on the Global Dairy Trade Auction was not supportive of price strength, but it indicates U.S. butter is competitive in the world market.
OUTSIDE MARKETS SUMMARY:
March corn closed down 0.25 cent per bushel at $4.3225, January soybeans closed up 6.50 cents at $9.9175 and January soybean meal closed up $2.50 per ton at $290.40. March Chicago wheat closed up 0.25 cent at $5.4750. February live cattle closed up $1.15 at $189.08. January crude oil is up $1.85 per barrel at $69.95. The Dow Jones Industrial Average is down 76 points at 44,706 with the NASDAQ up 77 points at 19,481.
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