OVERVIEW:
Milk futures were under pressure due to the decline in the spot butter and cheese prices. Prices will have limited upside potential, likely through the rest of the year. Seasonally, prices have little reason to increase.
MILK:
The November Class III contract is about half-priced, but it still moved the most today due to the large decline in the block cheese price. The October contract will cease trading on Tuesday, with the Federal Order prices being announced on Wednesday. The November price has declined near the October price, eliminating about half of the price increase seen during the last half of October. Class IV futures continued to slide lower with November through January contracts below $14.00. The weakness of the butter price continues to pull prices down. There is little reason for buyers of butter and cheese to be concerned over supplies. Increasing milk production leaves a sufficient supply to meet demand with no concern over tightening supplies.
AVERAGE CLASS III PRICES:
| 3 Month: | $17.03 |
| 6 Month: | $16.80 |
| 9 Month: | $16.85 |
| 12 Month: | $17.00 |
CHEESE:
The block cheese price declined 10.25 cents today, taking the price down near the lower end of the trading range. This is the largest one-day decline since March 4. This is not a good sign for the rest of the year. The prices generally see some weakness during the last two months of the year, but prices are declining from higher prices. Those higher prices have not developed this year. At best, cheese prices may remain sideways.
BUTTER:
Spot butter continues to see more trading activity than cheese. Retail demand has improved, but seems to be slower than a year ago. International demand is strong, but exports are not sufficient to support the market. Most churns are running on a full weekly schedule, keeping a good supply of butter for the market and minimizing the decrease in inventory.
OUTSIDE MARKETS SUMMARY:
December corn closed up 2.75 cents per bushel at $4.3425, January soybeans closed up 19.00 cents at $11.3425 and December soybean meal closed down $.80 per ton at $320.80. December Chicago wheat closed up 9.50 cents at $5.4350. December live cattle closed up $2.53 at $232.20. December crude oil is up $0.01 per barrel at $60.99. The Dow Jones Industrial Average is down 226 points at 47,337, with the NASDAQ up 110 points at 23,835.
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