GENERAL OVERVIEW:
Class III futures were hit hard due to the decline in spot prices. This renews the bearishness in the market.
MILK:
Not only have prices declined in the spot markets, but milk demand has slowed. Schools will be closed for the holiday period, diverting fluid milk to manufacturing. Cheese and butter production has already been strong, keeping sufficient supplies readily available for the market. Milk production remains strong overall and is expected to see a significant increase over a year ago on the December Milk Production report to be released on Monday. There is little expectation of reduced milk output from an increase in culling. Culling may increase due to the lower milk prices, but the reduction in cow numbers may be slow. More milk is already finding its way to the spot market, with prices this week ranging from $6.00 under class to $1.00 over. Prices are expected to decline further over the next few weeks.
AVERAGE CLASS III PRICES:
| 3 Month: | $15.59 |
| 6 Month: | $15.91 |
| 9 Month: | $16.38 |
| 12 Month: | $16.69 |
CHEESE:
The decline of the block cheese price today opens the way for a retest of the low. There is increasing concern that the price may fall below that level before the end of the year. Milk production will need to slow, or demand will need to remain strong, or both, before cheese prices can trend higher. There is no indication that this will take place moving into 2026.
BUTTER:
Hopefully, the butter price will be able to hold support. The concern is that the price is only a penny from the low seen in late November. Cream supplies remain heavy, with more anticipated to be available over the holiday season. Some plants will reduce production, which will put more cream on the spot market.
OUTSIDE MARKETS SUMMARY:
March corn closed up 4.00 cents per bushel at $4.4450, January soybeans closed down 6.00 cents at $10.5225 and January soybean meal closed up $.20 per ton at $298.40. March Chicago wheat closed up 1.50 cents at $5.0775. February live cattle closed down $1.15 at $228.40. February crude oil is up $0.07 per barrel at $55.88. The Dow Jones Industrial Average is up 66 points at 47,952, with the NASDAQ up 313 points at 23,006.
