MILK:
It seems that traders threw in the towel as the afternoon progressed with Class III futures posting substantial losses despite cheese prices remaining unchanged. The January contract fell 67 cents at one point. No bearish news surfaced that provided such a negative impact as to trigger heavy liquidation of futures into the close of trading. It would not be surprising to see weakness in the spot market on Thursday as the lack of buyers for blocks may turn sellers aggressive. The main news today was that the Fed cut the interest rate by 0.25% which had been expected, and the Dow fell 1,123 points. Milk production continues to trend higher in most areas keeping bottlers and manufacturers supplied with milk. USDA will release the November Milk Production on Thursday. I estimate milk production to be 0.4% above a year ago. Cow numbers will not see the dramatic increase they did in October but may see an increase of 3,000 head from the previous month.
AVERAGE CLASS III PRICES:
| 3 Month: | $19.34 |
| 6 Month: | $19.28 |
| 9 Month: | $19.14 |
| 12 Month: | $19.02 |
CHEESE:
The inability of cheese prices to increase on the spot market sent a negative tone through Class III milk futures. Cheese futures took a hit with contracts 4-5 cents per pound lower. Traders turned increasingly bearish as the day progressed. Cheese prices were expected to have limited upside potential, but buyers have been aggressive as prices increased. The fear of higher prices increased buying activity becoming more psychological than fundamental. Spot milk prices are seeing the effects of the holiday season with prices up to $5.00 below class.
BUTTER:
Butter futures did not succumb to the pressure in some of the other markets with contracts showing gains across the board. Churning has been active with bulk butter supplies readily available. However, demand is reported to remain strong, which could limit the downside in price. The end of the year could bring slower demand with the price retesting the recent lows before the end of the year.
OUTSIDE MARKETS SUMMARY:
March corn closed down 6.25 cents per bushel at $4.3725, January soybeans closed down 25.00 cents at $9.5175 and January soybean meal closed down $7.70 per ton at $279.50. March Chicago wheat closed down 3.75 cents at $5.4125. February live cattle closed down $1.43 at $188.33. February crude oil is up $0.37 per barrel at $70.02. The Dow Jones Industrial Average is down 1,123 points at 42,326 with the NASDAQ down 716 points at 19,393.
