MILK
Class III futures closed steady to lower with some contracts posting double-digit losses. However, trading after the market settled for the day showed futures moving higher in numerous contracts. The strength may have developed due to the release of the August milk production report. Milk production in the top 24 states showed an increase of 1.1% from a year ago. Production per cow totaled 2,007 pounds and 3 pounds below August 2020. This is the first decline in production per cow in quite some time compared to a year earlier. Cow numbers fell substantially, showing a decline of 20,000 head. There are still 112,000 head more than a year ago. Milk production in the country was up 1.1%. Milk production per cow averaged 1,987 pounds. Cow numbers fell 19,000 head from July. This was understandable as hot and humid weather with record temperatures dominated much of the country at that time. The other factor was high feed prices as some areas are in a severe drought. Some would rather quit the dairy business rather than try to source their feed from other areas at tremendous prices. This trend may continue, which may have triggered some of the increase of Class III milk futures later Monday.
AVERAGE CLASS III PRICES
| 3 Month: | $16.86 |
| 6 Month: | $17.07 |
| 9 Month: | $17.21 |
| 12 Month: | $17.34 |
CHEESE
The block/barrel spread came closer together rather quickly over the past week with the spread now at 12.50 cents. The question is whether the spread will continue to narrow and whether the spread moving closer together will be friendly to the market. Blocks quickly retreated from the top of the trading range as buyers stepped back waiting to purchase at lower prices. Barrels have developed a nice uptrend as supplies have tightened somewhat. The negative aspect of the market is that seldom are blocks and barrels moving in the same direction.
BUTTER
Butter lost its drive higher. Increasing retail demand and reducing supply still has been enough to continue to move price higher. We may see this choppy pattern through the rest of the year. Inventory is sufficient to supplement fresh production for the time being.
OUTSIDE MARKETS SUMMARY
December corn declined 5.50 cents, closing at $5.2175. November soybeans fell 21.50 cents, closing at $12.6250, with October soybean meal down $2.40 at $336.10 per ton. December wheat declined 8 cents, closing at $7.0075. October live cattle slipped $0.02, closing at $122.77. October crude oil fell $1.68, closing at $70.29 per barrel. The Dow fell 614 points, closing at 33,970 points, while the NASDAQ fell 330 points, closing at 14,714 points.
