GENERAL OVERVIEW:
Class III futures held up well despite a further decline in spot cheese prices. Class IV futures showed limited trade. The November Cold Storage report was released on Tuesday, showing a decrease in all categories except Swiss cheese.
MILK:
Class III futures closed mixed but mostly higher. This was a bit surprising, as spot cheese prices declined on Tuesday. This does not indicate that traders believe a bottom has been found, but it was just some position-trading ahead of the holidays. Continued weakness of underlying cash does not bode well for milk prices moving through the end of the year. This also sets the stage for a negative beginning to 2026. Traders are a bit optimistic for the second half of 2026, with Class III futures above $17 and the October contract nearly at $18. Much of this strength may not be from an optimistic view of cheese and butter prices, but more of the potential for the dry whey price. Dry whey demand has kept the dry whey price in the 70-cent level, with some estimating dry whey prices may increase significantly later in 2026.
AVERAGE CLASS III PRICES:
| 3 Month: | $15.55 |
| 6 Month: | $15.91 |
| 9 Month: | $16.41 |
| 12 Month: | $16.74 |
CHEESE:
USDA released the November Cold Storage report on Tuesday. Cheese inventory declined in all categories except Swiss cheese. American cheese stocks declined 11.8 million pounds from October, totaling 787.3 million pounds. This is 2% above a year ago. Swiss cheese stocks increased by 461,000 pounds from October, totaling 22.0 million pounds. This was 6% below a year ago. Other cheese stocks declined 8.1 million pounds from the previous month, totaling 552.7 million pounds. This is 2% above a year ago. Total cheese stocks reached 1.362 billion pounds. This was down 19.5 million pounds from October, but 2% above November 2024.
BUTTER:
Butter futures bounced, but the gains lacked conviction. The higher spot price caused some short-covering. Butter inventory in November declined 18.2 million pounds to 210.5 million pounds. This was just 1% below the November 2024 inventory. The report is slightly bearish.
OUTSIDE MARKETS SUMMARY:
March corn closed up 0.50 cent per bushel at $4.4750, January soybeans closed down 1.75 cents at $10.5150 and March soybean meal closed up $2.30 per ton at $304.20. March Chicago wheat closed up 1.50 cents at $5.1700. February live cattle closed down $1.43 at $230.00. February crude oil is up $0.37 per barrel at $58.38. The Dow Jones Industrial Average is up 78 points at 48,442, with the NASDAQ up 133 points at 23,562.
