MILK
Class III milk futures spent most of the day in positive territory but succumbed to selling pressure into the close in some of the nearby contracts. Traders were somewhat disappointed over the inability of barrel cheese price to extend gains Tuesday. With milk production remaining strong and the possibility of production remaining quite a bit higher through the end of the year, there is little reason for bottlers and manufacturers to be concerned about tightening supply. Feed prices will be high throughout the next year relative to last year with some areas already paying very exorbitant prices for dairy-quality hay. Some relief is on the way whenever the government figures out how they are going to appropriate the money for the market volatility payments and the calculation for the revised Dairy Margin Coverage payments. However, those will fall far short of compensating for increased costs this year. The CME implemented a conditional extension period for spot-market trading on Monday. The following is the release from the CME:
"The Conditional Extension Period shall only be triggered when an auction reaches the maximum duration of 10 minutes and will be in effect for 15 seconds following the final call. No new orders may be entered during the Conditional Extension Period. Existing orders may remain and be executed during the Conditional Extension Period. With exception of the highest bid and the lowest offer, orders may be cancelled during the Conditional Extension Period."
AVERAGE CLASS III PRICES
| 3 Month: | $16.90 |
| 6 Month: | $17.16 |
| 9 Month: | $17.25 |
| 12 Month: | $17.30 |
CHEESE
There is concern the rally in cheese prices may be limited with the inability of barrels to increase Tuesday. This bearish attitude continues to permeate the market and will be very difficult to shake unless the market is affected adversely with a decline of milk production or a substantial prolonged increase in demand for fresh cheddar cheese. But with the increase of inventory during the month of July, this is not a likely scenario for the foreseeable future.
BUTTER
Price extended its gain Tuesday moving price back to the highest level in a month. The decline of inventory in July was a positive aspect for the market, which could provide further support for price as demand increases seasonally.
OUTSIDE MARKETS SUMMARY
September corn gained 6.50 cents, closing at $5.4450. September soybeans jumped 43 cents, closing at $13.37, with September soybean meal up $8.30 per ton, closing at $354.90. September wheat slipped 1.75 cents, closing at $7.18. August live cattle declined $0.65, closing at $125.80. October crude oil gained $1.90, closing at $67.54 per barrel. The Dow gained 31 points, closing at 35,366, while the NASDAQ gained 27 points, closing at 15,020.
