GENERAL OVERVIEW:
Class III milk futures closed under pressure in most contracts due to the decline of the block cheese price. Class IV futures posted double-digit gains in most contracts despite the decline in the butter price as traders focused on the gain in nonfat dry milk. October fluid milk sales were slightly below a year ago.
MILK:
There is nothing to support the milk market. The new dietary guidelines released by the White House put meat, dairy, fruit and vegetables at the top of the new Food Pyramid. There have been questions as to how much impact this may have on dairy prices. I guess the answer to that was seen in the spot market today. It is unlikely to have much, if any, impact on the market under the current fundamentals. It is not that dairy was not a part of the dietary guidelines, and now it suddenly is. Dairy has always been a part of the Food Pyramid. Some increase in consumption may be realized, but it may not be sufficient to change the supply and demand balance. This may have about the same impact as putting whole milk and 2% milk back in schools, which had no impact. Strong cheese and butter exports have had little impact on the market as they have failed to tighten the supply. Colombia has dropped its investigation into U.S. milk powder imports after no evidence of unfair subsidies or harm to its domestic dairy industry. This ensures that American dairy exports will continue entering the Colombian market tariff-free under the current trade agreement.
AVERAGE CLASS III PRICES:
| 3 Month: | $15.11 |
| 6 Month: | $15.71 |
| 9 Month: | $16.30 |
| 12 Month: | $16.60 |
CHEESE:
The availability of spot loads of milk varies across the country, with some reports of good demand for spot milk over and above regular supplies. Other reports indicate limited interest in demand for extra spot loads of milk. It depended on the location and the variety of cheese produced. The bottom line is that strong cheese production is keeping cheese available for demand.
BUTTER:
Churning remains active with plants operating seven days a week. This level of production meets demand and then some. Plants continue to bring loads to sell on the spot market and are willing to lower the price to move it. There is no indication of a bottom.
OUTSIDE MARKETS SUMMARY:
March corn closed down .75 cent per bushel at $4.4600, March soybeans closed down 5.75 cents at $10.6125 and March soybean meal closed down $1.80 per ton at $303.60. March Chicago wheat closed steady at $5.1800. February live cattle closed up $0.75 at $235.28. February crude oil is up $2.41 per barrel at $58.40. The Dow Jones Industrial Average is up 270 points at 49,266, with the NASDAQ down 104 points at 12,480.
