OVERVIEW:
Milk futures were under pressure. Stronger cheese prices did not provide support to Class III contracts. Traders seemed to focus more on the renewed weakness of butter.
MILK:
The November Class III milk contracts pushed above $18.00 during the day but fell quite a bit later Tuesday. Traders seemed to focus on the weakness of butter rather than the strength of cheese. The potential for much upside movement is expected to be limited. However, buying interest for fresh cheese could be stronger than anticipated, moving closer to the holidays. Milk production is increasing and is being readily absorbed by the market. Stronger milk production is expected to continue over the next few months unless an unforeseen event takes place. Even though there has been substantial pressure on the cattle markets over the past few days, prices remain high and may not impact the prices received for calves for any length of time. There should not be a large increase in culling that would reduce cow numbers significantly. Keeping barns full will be the focus despite the current milk prices.
AVERAGE CLASS III PRICES:
| 3 Month: | $17.28 |
| 6 Month: | $17.01 |
| 9 Month: | $17.00 |
| 12 Month: | $17.15 |
CHEESE:
Cheese prices have now increased for three consecutive days, with prices showing surprising strength under the current market environment. The interest of buyers might be nearing an end as there were no unfilled bids remaining at the close of spot trading. It is not certain that prices have reached a threshold, but price increases have not lasted very long over the past few months.
BUTTER:
The weakness in butter Tuesday may cause buyers to step back and sellers to be more aggressive. This could increase pressure on the market and result in a new low for the year. Bulk butter is in plentiful supply, with much of the butter production for the retail market. Consumer demand has improved, but it is not enough to provide support under the spot market.
OUTSIDE MARKETS SUMMARY:
December corn closed up 3.25 cents per bushel at $4.3200, January soybeans closed up 10.25 cents at $10.9525 and December soybean meal closed up $8.30 per ton at $306.50. December Chicago wheat closed up 3.00 cents at $5.2900. December live cattle closed down $0.60 at $226.58. December crude oil is down $1.15 per barrel at $60.16. The Dow Jones Industrial Average is up 162 points at 47,706, with the NASDAQ up 190 points at 23,827.
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