GENERAL OVERVIEW:
Milk futures shook off the negativity of the weakness of barrel cheese and butter to find strength as Monday progressed. The barrel price does not have an impact on the class prices, but it does impact the blocks to some extent.
MILK:
It was positive to see some strength come into milk futures as traders digested the spot prices movement. However, the minor gains do little to indicate the market may have found support. The bearishness of the September Milk Production report continues to reverberate through the trade. The larger unexpected increase of 40,000 head from August leaves a cloud over the market. The current high cow numbers, with a production of 30 pounds per cow, leaves a lot of milk available for the market to absorb. Third-quarter milk production was 3.8% higher than the same period a year ago. There were only four of the top 23 states that showed declines in milk output in September. Washington declined 8.5%, Illinois was down 1.5%, New Mexico was down 1.3%, and Ohio was down 0.4%. The state with the largest increase was Kansas with a gain of 21.1%t, followed by Georgia, up 9.8%, and Idaho, up 9.1%. California was 2.4% higher, with Wisconsin up 2.8%.
AVERAGE CLASS III PRICES:
| 3 Month: | $16.75 |
| 6 Month: | $16.72 |
| 9 Month: | $16.79 |
| 12 Month: | $16.98 |
CHEESE:
Block cheese made a small attempt at rebounding from the low, but the strength lacked conviction. The strong milk production being seen keeps sufficient milk available to the market. Buyers purchase supplies when they need to fill orders, but see no need to purchase to build inventory, as there is little anticipation for higher prices anytime soon.
BUTTER:
The butter price worked higher last week, but it may have reached a threshold again with buyers stepping back in anticipation of the price slipping back down again. The price may be able to hold above the low and see some bounces as holiday demand improves, but the level of butter production will keep the upside limited for the foreseeable future.
OUTSIDE MARKETS SUMMARY:
December corn closed up 4.50 cents per bushel at $4.3475, January soybeans closed up 32.75 cents at $11.5725 and December soybean meal closed up $8.30 per ton at $330.80. December Chicago wheat closed up 17.00 cents at $5.4425. December live cattle closed up $2.13 at $221.28. December crude oil is down $0.35 per barrel at $59.74. The Dow Jones Industrial Average is down 557 points at 46,590, with the NASDAQ down 193 points at 22,708.
