MILK
Class III futures were steady to lower across the board with September through February contracts posting double-digit losses. The weakness of cheese was exaggerated as traders turned aggressive sellers in the futures market. There is sufficient milk for both bottling and manufacturing, but more milk is moving to bottling, reducing the amount available for manufacturing. Earlier, there were reports that some plants had to turn away new order for cheese because they would not be able to fill those orders. Yet, spot cheese prices are not reflecting that. There are some reports that the current heat and humidity in the Central Region is having a greater impact on milk production than throughout the previous periods of the summer. It may be difficult for cows to recover from the current hot weather period. This is not expected to cause a shortage that will push milk prices higher, but it may tighten supply enough to support the market. It is unclear what that level might be, and we hope that it will be higher than futures are currently indicating. Spot milk prices are reported at $0.50 to $1 over class, indicating milk supply is tightening. The report Wednesday of Horizon Organic ceasing to purchase milk from 28 farms in Vermont and New Hampshire as well as other farms in Main and New York as of September 2022, is of grave concern. This currently leaves three milk buyers of organic milk is this region of which one is planning on leaving the region in the future. In 1970, there were 4,000 dairy farms in Vermont with the current count being around 580 farms, of which around one-third of them are organic.
AVERAGE CLASS III PRICES
| 3 Month: | $16.65 |
| 6 Month: | $16.92 |
| 9 Month: | $17.05 |
| 12 Month: | $17.15 |
CHEESE
Cheese demand is strong both domestically and internationally. There have been continued reports of some difficulties of moving product due to a shortage of truck drivers. This has been an ongoing problem since last year and likely will not change anytime soon. Cheese supply is sufficient, and even with more milk moving to bottling, current supply is adequate. Buyers of cheese have no concern over supplies.
BUTTER
The concern over the impact of the Delta variant of COVID on demand is unwarranted. It might have more impact on the ability to move product to where it needs to go, but it likely will not have an impact on demand. What is not consumed through the foodservice industry is going to be consumed at home. Some restaurants are reporting a continued increase in traffic. Price should remain sideways to higher.
OUTSIDE MARKETS SUMMARY
September corn gained 1.50 cents, closing at $5.5275. September soybeans jumped 21.40 cents, closing at $13.6750, with September soybean meal up $4.20, closing at $356.50 per ton. September wheat jumped 14 cents, closing at $7.2525. August live cattle fell $1.15, closing at $123.27. October crude oil lost $0.56, ending at $67.80 per barrel. The Dow declined 192 points, closing at 35,213, while the NASDAQ declined 96 points, closing at 14,946.
