MILK:
Milk futures moved lower in response to the weakness of cheese and nonfat dry milk. Lower cheese prices pushed Class III milk futures lower while the weakness of Grade A nonfat dry milk impacted Class IV futures. The weakness at this time of year does not bode well for the market as buyers generally would be looking ahead to fall demand and purchasing more aggressively. However, increased milk production keeps bottling and manufacturing well supplied. The Global Dairy Trade auction Tuesday showed the trade weighted average declined 2.9% from the previous event. This was the seventh consecutive decline of the trade weighted average and the ninth consecutive decline of the index. Anhydrous milk fat declined 0.3% to $5,615 per metric ton (mt) or $2.55 per pound. Butter declined 0.8% to $4,419 mt or $2.00 per pound. Cheddar cheese price increased 1.3% to $4,022 mt or $1.82 per pound. Lactose fell 8.9% to $1,127 mt or $0.51 per pound. Skim milk powder declined 5.2% to $2,971 mt or $1.35 per pound. Whole milk powder declined 3.8% to $3,730 mt or $1.69 per pound. Buttermilk powder was not offered at this event.
AVERAGE CLASS III PRICES:
| 3 Month: | $16.61 |
| 6 Month: | $17.16 |
| 9 Month: | $17.26 |
| 12 Month: | $17.34 |
CHEESE:
The pressure on cheese prices seems to have increased after the recent rally. Gains for blocks have not yet been eliminated, but barrels have taken it all away and then some. There is plenty of milk to meet production needs and plenty of product to meet demand. Buyers have stepped back from the market after the brief price increase two weeks ago and will remain less aggressive to pick up supply as long as sellers continue to offer cheese on the spot market. This weakness at this time of year does not bode well for the market in the near term.
BUTTER:
Price has been able to hold above cheese with the distance between them growing. Supply and demand seems to be more balanced, which leaves the market supported, but not able to trend higher. U.S. price remains lower than world price, which should keep exports strong.
OUTSIDE MARKETS SUMMARY:
September corn jumped 15.75 cents, closing at $5.7175. August soybean jumped 15.50 cents, closing at $14.4350 with August soybean meal up $5.70 per ton, closing at $365.50. September wheat gained 2.75 cents, ending at $7.0050. September crude oil gained $0.85, closing at $672.0 per barrel. The DOW jumped 550 points, closing at 34,512 while the NASDAQ jumped 224 points, ending at 14,499.
