MILK
Nearby Class III futures posted strong gains, following the rise of spot cheese prices. September showed the greatest gain, touching limit up at one point, but unable to close at that level. Traders were not as bullish in later contracts as there remains an overall bearishness to price potential and duration of stronger prices. September Class III futures rose more than a dollar this week, despite the losses suffered yesterday. The strong close today sets the stage for further gains next week. Milk availability has begun to decrease, which has had an impact in spot milk availability. This has reduced the large discounts that have been prevalent in the market for quite some time. Spot milk still carries a larger discount than usual for this time of year, but will likely continue to erode. Impact is being felt from more milk moving to deficit areas to fill school pipelines, and also from hot and dry weather. Cheese plants are using more nonfat dry milk to fortify vats and increase cheese yields.
AVERAGE CLASS III PRICES
| 3 Month: | $17.18 |
| 6 Month: | $17.52 |
| 9 Month: | $17.50 |
| 12 Month: | $17.51 |
CHEESE
For the week, blocks jumped 17.75 cents with nine loads traded. Barrels jumped 14 cents, with 17 loads traded. Dry whey declined 2.25 cents with three loads traded. Block price is now at the highest level since May 12, gaining an impressive 35.50 cents from the low on June 9, and a gain of 29 cents from the most recent low on July 21. Barrels are at the highest price since July 19 and 14.25 cents off their recent lows. There has been ongoing discussion as to the duration of the wide block/barrel spread. For years, the spread did not remain wide for a long duration, but that has changed as each category moves on its own fundamentals and the spread can remain wide for a long time.
BUTTER
For the week, butter increased 2.25 cents with nine loads traded. Grade A nonfat dry milk increased 1.50 cents with 11 loads traded. Butter production has been relatively stable the past few weeks. A few plants are selling some cream in order to limit inventory growth. Buyers have been comfortable buying on an as-needed basis.
OUTSIDE MARKETS SUMMARY
September corn increased 1.25 cents to close at $5.6825. September soybeans jumped 26 cents, closing at $13.73, with September soybean meal up $2.40, closing at $357.60 per ton. September wheat gained 8.75 cents, closing at $7.6225. August live cattle was down $0.40, closing at $122.75. September crude oil was down $0.65, closing at $68.44 per barrel. The Dow Jones Industrial Average gained 16 points, closing at 35,515 points, while the NASDAQ gained 7 points to close at 14,823 points
