OVERVIEW:
Class III futures gained some strength later in the day, with most traded contracts posting gains. Class IV contracts showed increased losses, with all contracts posting double-digit declines. The production of seasonal dairy products is increasing.
MILK:
As traders digested the minor movement of spot prices, Class III contracts began finding support later in the day. Class IV contracts saw pressure as weakness in butter and nonfat dry milk increased the negativity of traders. Milk production continues to improve, with weather contributing to greater cow comfort. The seasonal production of dairy products for the upcoming holiday period is increasing the demand for milk and cream for Class II production. Demand is improving for some dairy products and is higher in some cases than it was a year ago. This may be the result of delayed buying interest due to previous low prices and buyers purchasing on an as-needed basis. Buyers have been increasing their purchases due to the increase in demand. Milk futures remain significantly lower than a year ago. To put it in perspective, November Class III futures were nearly $2.00 higher a year ago. November Class IV futures were about $7.40 higher than currently.
AVERAGE CLASS III PRICES:
| 3 Month: | $17.33 |
| 6 Month: | $17.04 |
| 9 Month: | $17.04 |
| 12 Month: | $17.18 |
CHEESE:
Overall, cheese demand is improving, but increasing milk production is keeping sufficient milk available for manufacturing. There was a slight increase in spot milk prices from last week, with current prices ranging from flat class to $2.00 over. Spot loads of block cheese are available to the market, but the supply of barrel cheese remains tight.
BUTTER:
Butter production is strong as churns utilize the available cream. Most plants are operating seven days a week. Retail and food service demand is improving, requiring inventory supply to supplement fresh production. This is not unusual, but what may be unusual is that increased production may reduce the volume of butter needed to supplement current output.
OUTSIDE MARKETS SUMMARY:
December corn closed up 2.00 cents per bushel at $4.3400, January soybeans closed down .75 cent at $10.9450 and December soybean meal closed up $2.20 per ton at $308.70. December Chicago wheat closed up 3.25 cents at $5.3225. December live cattle closed up $4.33 at $230.90. December crude oil is up $0.33 per barrel at $60.48. The Dow Jones Industrial Average is down 74 points at 47,632, with the NASDAQ up 131 points at 23,958.
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