Wednesday Closing Dairy Market Update - Class IV Futures Move Above $20.00

GENERAL OVERVIEW:

There was a slight reprieve from the bearishness in Class III futures. Trading activity was high in both Class III and Class IV contracts. Class IV futures showed strong gains, with the October and November contracts above $20.00.

MILK:

Trading activity was strong, with the October Class III contract posting over 1,000 trades, followed by November with over 800 contracts traded. Class IV trading activity was unusually high, with contracts traded through September 2027. The October and November contracts moved above $20.00, where they have not been since April 28. The increase in the nonfat dry milk price is relentless, with the spot price either steady or higher for the past 14 consecutive trading days. The August Milk Production report showed higher milk production due to cow numbers being 167,000 head more than a year ago. August was a month with a lot of hot weather, which resulted in milk per cow being one pound below a year ago. Milk per cow may rebound significantly as the hot weather is behind us. This will maintain milk output above a year ago for the rest of the year and possibly longer. USDA will release the August Livestock Slaughter report on Thursday showing the level of culling seen during the month. Even if culling was higher, the increase was offset by higher cow numbers.

AVERAGE CLASS III PRICES:

3 Month:	$15.89
6 Month:	$16.17
9 Month:	$16.47
12 Month:	$16.71

CHEESE:

Cheese production is steady in most cases. A significant volume of milk is moving to the Southeast from the Midwest to satisfy the general demand from consumers and the increased demand from school accounts. The spot price indicates the supply has not changed much from the previous week, as spot milk prices are flat class to $2.00 above class. The dry whey price moved to the highest level since February 23, 2022, at the close of spot trading.

BUTTER:

The tone of the butter market is somewhat uncertain. Cream supplies are steady and increasing, leaving sufficient supplies available for those who need to purchase for production. Ice cream production is winding down. Butter demand in some areas of the country is termed lackluster and lower than expected at the current low prices. Retail sales should begin to improve as the Fall season is here.

OUTSIDE MARKETS SUMMARY:

December corn closed down 7.75 cents per bushel at $5.2900, November soybeans closed down 7.50 cents at $13.1800, and December soybean meal closed down $.10 per ton at $370.60. December Chicago wheat closed down 8.75 cents at $7.0850. December live cattle closed up $2.90 at $222.35. November crude oil is up $2.13 per barrel at $92.65. The Dow Jones Industrial Average is down 352 points at 51,512, with the NASDAQ down 308 points at 26,936.

Wednesday Midday Dairy Market Summary - Dry Whey Moves to the Highest Price Since 2022

OUTSIDE MARKETS SUMMARY:

CORN:	7 Lower
SOYBEANS:	9 Lower
SOYBEAN MEAL:	$0.40 Higher
LIVE CATTLE:	$1.92 Higher
DOW JONES:	328 Points Lower
NASDAQ:	338 Points Lower
CRUDE OIL:	$1.29 Higher

MIDDAY MARKET UPDATE:

The block cheese price slipped 0.75 cent to close at $1.3575 with 7 loads traded. The barrel cheese price remained unchanged at $1.4525 with no loads traded. The dry whey price increased 1.00 cents to close at 79.75 with 2 loads traded. This is the highest dry whey price since February 23, 2022. Class III futures are mixed, ranging from 14 cents lower to 9 cents higher. The butter price increased 2.50 cents to close at $1.3650 with 33 loads traded. Butter may have turned a corner. There were 60 unfilled bids and 10 uncovered offers remaining at the close of spot trading. Grade A nonfat dry milk increased 2.50 cents to close at 2.1500 with 6 loads traded. Class IV futures are 1-41 cents higher in active trading. Butter futures are 0.50 cent lower to 1.12 cents higher. Dry whey futures are steady to 0.25 cent higher. Cheese futures are 1.40 cents lower to 0.10 cent higher. Nonfat dry milk futures are 1.67 -- 3.92 cents higher. 

Wednesday Morning Dairy Market Update - Uncertainty Dominates the Market

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	5 to 10 Higher
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	6 to 8 Lower
Soybean Futures:	8 to 9 Lower
Soybean Meal Futures:	$0.50 to $1 Lower
Wheat Futures:	9 to 11 Lower

MILK:

Milk production continues to increase. The increase is due to more cows in the nation's dairy herd. Milk production was expected to be higher in the August milk production report, but the increase in cow numbers was not expected. Low milk prices have not thwarted the desire to increase cow numbers. The hope is that lower milk prices will be short-lived, but not according to the current futures market. The highest Class III price seen through 2027 is $17.59. That will be much better than the $15.72 price we are looking at for October, but still nothing to get excited about. Class IV futures are better, but do show contracts through 2027 no higher than $18.50.

CHEESE:

There is little reason for cheese buyers to be aggressive in th spot market. The supply of cheese is plentiful, with current demand being met and supplies being purchased for later demand. As milk production increases, cheese production will increase, resulting in higher inventory through the end of the year than a year ago.

BUTTER:

The price is only 4 cents from the low that was last seen in early January. Buyers are active in the spot market, but not aggressive. They see no reason to be aggressive due to sufficient butter available to the market. Butter output is slowly increasing as the butterfat content in milk improves and cream supply increases.