GENERAL OVERVIEW:
Class III futures closed under pressure despite the increase in block cheese and dry whey prices. Class IV futures were mixed despite the increase in the Grade A nonfat dry milk price. The Global Dairy Trade auction trade-weighted average decreased 1.1%.
MILK:
Milk futures did not respond to higher cash prices. It is likely the increase in the block cheese price will be short-lived, keeping the market bearish. There is nothing that can be seen as friendly to the market. It is unlikely that culling will increase anytime soon to make enough of a difference to tighten the milk supply. The first reaction is to push more milk production to make up for lower milk and calf prices. Expansions continue as increased processing capacity has allowed some farms to expand. The Global Dairy Trade auction trade-weighted average declined 1.1%. This is the first decline after four consecutive gains. There were 42,444 metric tons sold at an average price of $3,868 per metric ton. The anhydrous milk fat price decreased 3.0%to $5,739 per metric ton or $2.60 per pound. Butter decreased 5.7% to $4,760 per metric ton or $2.16 per pound. Buttermilk powder decreased 0.5% to $4,549 per metric ton or $2.06 per pound. Cheddar cheese jumped 16.5% to $4,075 per metric ton or $1.85 per pound. Lactose decreased 4.3% to $1,794 per metric ton or $0.81 per pound. Skim milk powder increased 0.1% to $3,689 per metric ton or $1.67 per pound. Whole milk powder decreased 0.8% to $3,565 per metric ton or $1.62 per pound. Mozzarella cheese decreased 6.0% to $3,992 per metric ton or $1.81 per pound.
AVERAGE CLASS III PRICES:
| 3 Month: | $16.11 |
| 6 Month: | $16.39 |
| 9 Month: | $16.65 |
| 12 Month: | $16.86 |
CHEESE:
The bounce in the block cheese price is expected to be short-lived. There is little reason for buyers to remain aggressive. It is likely that immediate orders need to be filled, causing buyers to be more aggressive. Once those orders are filled, there may be little else to support the market. I hate to sound bearish, but fundamentally, there is little to provide sustained support to the market.
BUTTER:
The butter price is only 5.50 cents above the low for the year that was set on January 13th. One would think the low price would stimulate demand, but it has not been sufficient to tighten the supply. There is no clear indication as to where the bottom might be.
OUTSIDE MARKETS SUMMARY:
December corn closed up 2.50 cents per bushel at $5.3575, November soybeans closed up 14.50 cents at $13.1875, and December soybean meal closed up $9.20 per ton at $365.40. December Chicago wheat closed up 6.50 cents at $7.2850. October live cattle closed down $1.55 at $220.70. October crude oil is up $4.49 per barrel at $105.88. The Dow Jones Industrial Average is down 328 points at 52,093, with the NASDAQ down 205 points at 25,982.
