MILK
Class III milk futures showed nice gains despite the decline of block cheese price. Traders seem to anticipate price will not decrease very much and the movement of the block/barrel spread closer together could provide support to the overall market. Milk futures continued to push higher in anticipation of further gains of underlying cash through the fall. Milk production is improving, but certainly not overwhelming the market. The pace of milk production is actually slowing from what it had been earlier this year. The trend of higher culling and lower milk production per cow will have an impact on the market if the trend continues. If end-of-year demand continues to improve, milk prices could strengthen through the end of the year rather than peak in October. However, with milk production slowly increasing and cheese inventory above levels of a year earlier, it may be difficult for the market to uncover a sustained price rally. There are now six Class III futures contracts at or above $18 for the nearby three months of October, November and December and then August, September and October of 2022.
AVERAGE CLASS III PRICES
| 3 Month: | $18.21 |
| 6 Month: | $17.97 |
| 9 Month: | $17.92 |
| 12 Month: | $17.95 |
CHEESE
Production of American cheese totaled 452 million pounds during August according to the Dairy Products report released today. This was an increase of 1.5% from August 2020. Italian type cheese production totaled 486 million pounds, up 8.8% above a year ago. Total cheese output reached 1.14 billion pounds and 4.4% above a year ago. Dry whey production totaled 76.2 million pounds and was 3.3% below August 2020.
BUTTER
Butter output in August totaled 148 million pounds, down 1.7% below a year ago. Nonfat dry milk production fell 17% to 122 million pounds. Skim milk powder totaled 60.5 million pounds, down 12.7% from a year ago. Regular ice cream production was down 9.5% at 63.8 million pounds.
OUTSIDE MARKETS SUMMARY
December corn slipped 0.75 cent to close at $5.4075. November soybean declined 10.75 cents ending at $12.3575 with October soybean meal down $2.90 per ton to close at $322.10. December wheat gained 1.25 cents, closing at $7.5650. October live cattle jumped $2.22, closing at $122.62. November crude oil jumped $1.74, closing at $77.62 per barrel. The Dow fell 324 points, closing at 34,003 points, while the NASDAQ fell 311 points to close at 14,255.
