OVERVIEW:
Class III futures held up better than Class IV futures did. The weakness of cheese did not have quite the effect that butter had on the market. Butter is poised to fall below $2.00.
MILK:
There seems to be no support under the market. Buyers in the cash market are unconcerned about supplies and are not interested in chasing the market to purchase dairy products. Class IV futures are under more pressure due to the weakness of butter, with contracts through February below Class III contracts. This is the first time in several years that six months of Class IV futures are lower.
Mik production is improving as the weather is moderating, somewhat improving cow comfort. There is no indication of cow numbers declining. Improved cow comfort will result in higher output per cow. That will keep milk production significantly higher than a year ago. The benefit farmers continue to receive from beef-on-dairy calves has changed the usual culling of cows when milk prices are lower. Some of those cows are being kept in the barn rather than spending over $4,000 for a replacement. This is not expected to change anytime soon, resulting in a high level of cow numbers remaining for the foreseeable future.
AVERAGE CLASS III PRICES:
| 3 Month: | $17.22 |
| 6 Month: | $17.25 |
| 9 Month: | $17.29 |
| 12 Month: | $17.26 |
CHEESE:
Cheese prices are headed down to the bottom of the trading range they have been in since November 2024. Even if prices were to trend higher, it would take a monumental effort to move prices back up to the top end of the range. Cheese production has been steady, even though more milk has moved to supply the needs of school systems. Improving milk output will increase manufacturing and may keep the seasonal decrease in inventory lighter than usual during the second half of the year.
BUTTER:
The butter price is poised to move below $2.00 as buyers continue to feel comfortable with supplies and the current production level. Butter inventory below a year ago has not been a concern. Both retail and food service demand have been below a year ago. This keeps buyers less willing to purchase heavily in anticipation of demand, as they are uncertain of what that level of demand will be.
OUTSIDE MARKETS SUMMARY:
December corn closed down 2.00 cents per bushel at $4.1975, November soybeans closed down 2.50 cents at $10.3125 and December soybean meal closed up $3.40 per ton at $289.00. December Chicago wheat closed down 3.50 cents at $5.2025. October live cattle closed down $5.63 at $230.18. October crude oil is up $0.37 per barrel at $62.63. The Dow Jones Industrial Average is up 196 points at 45,711, with the NASDAQ up 81 points at 21,879.
