OVERVIEW:
Milk futures closed under pressure with Class IV contracts posting greater losses. The decline in the butter price put greater pressure on the market than the decline in cheese.
MILK:
Class III milk futures held up well despite the weakness of the block cheese price. Traders did not get carried away with futures when prices were increasing, but remained closely in line with the underlying cash. This reduced the need to eliminate the extra premium on price weakness. Milk output continues to slowly improve due to increased cow comfort and increased feed intakes. Grain harvest is progressing rapidly, ensuring a plentiful feed supply at reasonable prices. The high prices for replacement heifers are expected to increase further as the supply is not going to increase anytime soon, and beef-on-dairy calves can be sold for record-high prices.
AVERAGE CLASS III PRICES:
| 3 Month: | $16.99 |
| 6 Month: | $16.96 |
| 9 Month: | $17.01 |
| 12 Month: | $17.11 |
CHEESE:
The barrel supply seems to be tight, which should support the price. However, demand is not very strong, leaving the market with limited upside potential. If the weakness of blocks continues, it may pull the barrel price down with it. Cheese prices are expected to remain in the trading range they have been in since November.
BUTTER:
The butter price fell to the lowest level it has been since September 25, breaking below the recent sideways trading range. It can be seen that the butter price may have found a bottom, but it appears there may not be much upside price potential. Once buyers have purchased immediate needs, they are unwilling to increase inventory by bidding for further supplies.
OUTSIDE MARKETS SUMMARY:
December corn closed up 2.75 cents per bushel at $4.2175, November soybeans closed down .25 cent at $10.1775 and December soybean meal closed down $1.50 per ton at $277.10. December Chicago wheat closed down 2.50 cents at $5.1275. December live cattle closed up $2.18 at $236.68. November crude oil is up $0.90 per barrel at $61.78. The Dow Jones Industrial Average is down 63 points at 46,695, with the NASDAQ up 161 points at 22,942.
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