MILK
Class III milk futures were unable to find any support despite the strength of barrel cheese offsetting the decrease of blocks. Traders were content to hold through the weekend and wait to see what next week brings. There is support for an immediate return to the higher of Class III or Class IV price to set the Class I price. This would be a temporary measure until a permanent pricing solution can be adopted. The current method is the average of Classes III and IV plus a 74-cent price adjuster, which created much lower income last year. The implementation of a new pricing formula is likely to take an extended period. An immediate return to a higher of Class III or Class IV will be necessary, or we may look at the current pricing remaining intact for a few years before something is decided and passed through Congress. Right now, milk futures show Class III and Class IV prices closely aligned, which alleviates the issues of last year.
AVERAGE CLASS III PRICES
| 3 Month: | $16.92 |
| 6 Month: | $17.14 |
| 9 Month: | $17.27 |
| 12 Month: | $17.38 |
CHEESE
For the week, blocks gained 0.25 cent with four loads traded. Barrels increased 3.25 cents with 19 loads traded. Dry whey increased 0.50 cent with two loads traded. Even though cheese and dry whey prices increased, Class III futures declined for the week. The inability of cheese prices to increase during this time of year is causing more concern. If prices are not able to improve now, what will happen when demand slows? The U.S. City Average Retail price for natural cheese in August was $5.34 per pound. This is 23 cents lower than a year ago. The average process cheese price was $3.98, down 31 cents from a year ago.
BUTTER
For the week, butter increased 0.50 cent with 22 loads traded. Grade A nonfat dry milk declined 0.75 cent with nine loads traded. Butter production is lower due to a tighter cream supply as well as some plants scheduling downtime for plant maintenance. Supply is not tight with inventory above year-earlier levels.
OUTSIDE MARKETS SUMMARY
December corn declined 2.25 cents, closing at $5.2725. November soybeans fell 12 cents, closing at $12.84, with October soybean meal down $1.70 per ton, closing at $338.50. December wheat declined 4.25 cents, closing at $7.0875. October live cattle declined $0.80, closing at $122.80. October crude oil declined $0.64, closing at $71.97 per barrel. The Dow lost 166 points, closing at 34,585, while the NASDAQ declined 138 points, closing at 15,044.
