Wednesday, August 18, 2021

Wednesday Closing Dairy Market Update - Class III Milk Futures Close Under Pressure Again

MILK

Class III milk futures closed under pressure again Wednesday despite the movement of cheese prices indicating a stable market. Milk production is declining but along seasonal lines. At the same time, demand for fluid milk is strengthening due to school already open or opening over the next few weeks. Dairy Market News reports that milk supply is tightening as there is greater demand from bottlers. However, a tightening milk supply does not mean that there will be a shortage. It means the heavy supplies of the past few months are decreasing. Plenty of milk remains available for manufacturing and for bottling. Spot milk price discounts are decreasing along seasonal lines with spot milk in the Midwest not showing any discounts. The September Class I price was announced at $16.59. This was a decrease $0.31 from August and a decrease of $1.85 from September 2020. USDA will release the July Monthly Milk Production report Thursday. I estimate July milk production to show an increase of 2.6% from a year ago with cow numbers down 1,000 head from May.

AVERAGE CLASS III PRICES

3 Month: $16.81
6 Month: $17.10
9 Month: $17.19
12 Month: $17.26

CHEESE

Many cheese plants are reporting stronger sales. Dairy market news reports that some cheese plants in the Midwest are turning down new orders due to the inability to keep up with demand. This is interesting as this is not being reflected in the spot cheese market yet. Buyers have been able to obtain the cheese needed to fill orders without difficulty at the present time. This may have an impact on the market down the road but is not a concern now. International demand is reported to be strong.

BUTTER

Butter production has not been affected by tightening milk supply. Churns remain active with cream supply readily available. Retail sales of butter have been steady with little on the horizon to indicate a strong surge in demand. Export sales are strong, but that has not resulted in any tightness of supply. There is little anticipation a higher trend in price will develop anytime soon.

OUTSIDE MARKETS SUMMARY

September corn gained 3.50 cents, closing at $5.6175. September soybeans fell 10.75 cents, ending at $13.5825, with September soybean meal down $2.50 per ton, closing at $357.60. September wheat gained 2.75 cents, closing at $7.3725. August live cattle gained $0.72, ending at $124.02. September crude oil fell $1.13, closing at $65.46 per barrel. The Dow fell 383 points, closing at 34,961, while the NASDAQ fell 130 points, ending at 14,526.




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