OVERVIEW:
Milk futures were under pressure due to the decline in spot cheese prices. Some Class III contracts strengthened late in the day. USDA will release some delayed reports next week.
MILK:
Class IV futures remain under substantial pressure due to the continued weakness of the butter price. This has become a real concern as November, December, and January contracts are below $14.00, with the February contract holding just above that level. There is no indication as to where support will be found in butter. Higher milk production and the strong butterfat content in milk keep butter manufacturers well-supplied with cream. Cheese production is steady as milk is available, with butter production increasing. The weather has been very good for milk production and has allowed harvest to progress rapidly. Some key reports will be released next week despite the government shutdown. The September Milk Production report will be released on November 10, with the October Milk Production report scheduled for November 21. The World Agricultural Supply and Demand report will be released on November 14. The Cattle on Feed report will be released on November 21. The government is making an exception to release these key reports for the industry.
AVERAGE CLASS III PRICES:
| 3 Month: | $16.90 |
| 6 Month: | $16.77 |
| 9 Month: | $16.88 |
| 12 Month: | $17.05 |
CHEESE:
Cheese buyers see no reason to be aggressive in the market. Sellers need to move cheese to prevent the potential for inventory increasing at the plant level. This time of year is when inventory should decline, as demand exceeds cheese production. Inventory is likely declining, but it may be doing so at a slower pace than usual.
BUTTER:
The butter price made a new low for the year as manufacturers continue to offer supplies to the market. The last time butter declined this much in one day was August 28. There is no indication as to where the market may find support. It would make sense that buyers might step up to take advantage of the low price. However, with sufficient supply and higher butter output, they see no reason to be aggressive.
OUTSIDE MARKETS SUMMARY:
December corn closed down 2.75 cents per bushel at $4.3150, January soybeans closed down 12.75 cents at $11.2150 and December soybean meal closed down $3.40 per ton at $317.40. December Chicago wheat closed up 6.75 cents at $5.5025. December live cattle closed down $4.43 at $227.78. December crude oil is down $0.49 per barrel at $60.56. The Dow Jones Industrial Average is down 251 points at 47,085, with the NASDAQ down 486 points at 23,349.
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