GENERAL OVERVIEW:
Cheese prices were lower, but Class III futures held up well. Traders seem to have a sense that the market may find a bottom soon, even though it has yet to find that bottom. After four weeks of trading, spot barrels finally have a load traded.
MILK:
Surprisingly, Class III futures closed higher for the week despite a significant decline in spot cheese prices. It seemed that traders might have turned less bearish on the market, feeling that cheese prices are nearing the lows. The weakness of milk futures has been depressing, as it appears milk prices in December may be significantly lower than they were in November. The only consolation we can take is that low prices will cure low prices. However, the duration of the low prices can extend for a significant amount of time. Concern has developed recently over the weakness seen in the cattle market and the impact on calf prices. However, the impact may be short-lived as cattle prices have rebounded over the past eight days. Calf prices should remain strong as long as cattle supplies remain tight.
AVERAGE CLASS III PRICES:
| 3 Month: | $15.61 |
| 6 Month: | $15.91 |
| 9 Month: | $16.31 |
| 12 Month: | $16.60 |
CHEESE:
For the week, the block cheese price fell 9.00 cents with 34 loads traded. The barrel cheese price fell 17.00 cents with one load traded. This was the first load traded over the past four weeks. Despite the weakness of cheese, Class III futures closed higher for the week. Traders seem to be reducing some of the bearishness they have been carrying for quite some time. The thinking may be that the market has limited downside from here. The dry why price increased 1.25 cents this week, with four loads traded.
BUTTER:
For the week, butter increased 2.75 cents with 25 loads traded. Grade A nonfat dry milk increased 2.75 cents with 14 loads traded. Butter futures close higher for the week, but traders showed little conviction that the price has much upside potential.
OUTSIDE MARKETS SUMMARY:
March corn closed down 2.50 cents per bushel at $4.4475, January soybeans closed down 14.25 cents at $11.0525 and January soybean meal closed down $3.80 per ton at $307.40. March Chicago wheat closed down 4.50 cents at $5.3575. February live cattle closed up $3.15 at $227.15. January crude oil is up $0.41 per barrel at $60.08. The Dow Jones Industrial Average is up 104 points at 47,955, with the NASDAQ up 73 points at 23,578.
