Barrels Continue Freefall
USDA released the November milk production report on Tuesday with domestic production 1% higher than November 2016. In total, 17.3 billion pounds were produced by 9.4 million dairy cows. The cow numbers are unchanged from the October number but 57,000 head greater than November 2016. November production per cow made gains of 9 pounds over last year's numbers.
The free fall in the CME cheddar barrels continued on Wednesday. After 11 trades, barrels dropped 8 more cents and finished at $1.40 per pound. Barrels have now dropped 26 cents per pound in three trading sessions this week. Blocks were down 1 1/2 cents and closed at $1.43 1/2. With Wednesday's trade, the blocks and barrels moved back into a very normal spread of 3 1/2 cents per pound. Butter fell 1 1/2 cents to settle at $2.19 1/2 while grade A nonfat dry milk was unchanged at 64 3/4 cents per pound.
Despite the lower barrel market Wednesday, Class III milk markets found a way to hold together. December was unchanged at $15.44 per cwt. First half prices closed 6 to 15 cents softer and finished with a $14.05 average. The third quarter was 2 to 4 cents lower and the fourth quarter was unchanged. The 2018 average settled at $14.75 per cwt. Class IV markets were unchanged for December and 1 to 8 cents lower January through August 2018. The 2018 average dropped to $14.25 per cwt.