MILK
Milk futures took a beating again today with Class IV contracts falling more than Class III. Class IV prices are in a much better position than Class III due to a much higher butter price having greater support than cheese prices. Milk production is sufficient for manufacturing and bottling needs. Plants are not running full but are as full as their workforce allows. It has been an ongoing struggle to maintain a full production staff at many plants. This has had a greater impact on butter production than cheese production for some reason. Or it may be the fact that the attractive prices for cream this summer resulted in plants selling a portion of their cream rather than churn it. There have been more producers that have been struggling with the high cost of production and are questioning whether they should remain in business. Farms going out of the dairy business is not something that we like to see, but it is another difficult time that will be worked through. There have been many other times in the past and yet cow numbers remain steady and production per cow continues to improve. The August Federal Order class prices will be released tomorrow with the trade anticipating a Class III price of $20.12 and a Class IV price of $24.86. USDA will also release the July Agricultural Prices report providing average prices used in calculating the income over feed price.
AVERAGE CLASS III PRICES
| 3 Month: | $20.30 |
| 6 Month: | $20.60 |
| 9 Month: | $20.54 |
| 12 Month: | $20.50 |
CHEESE
Prices will move as business is accomplished. The weakness of price is not a matter of slow demand but one of plentiful supply. Buyers of cheese are able to purchase sufficient supply for current needs out in the country leaving little reason to come to the daily spot market to purchase. This leaves sellers with more cheese than they would like after meeting demand in the country. The cheese is offered on the daily spot market and sellers have sometimes had difficulty finding buyers even at lower prices. This is why the market remains under pressure and may not change anytime soon.
BUTTER
The decline of butter price today is not a change in the market. Buyers did not show up to do any business and sellers wanted to move product. Even a lower price did not generate buying interest. Price may move down to test the $3.00 level again. Demand has slowed but remains good.
OUTSIDE MARKETS SUMMARY
September corn declined 4 cents closing at 46.7975. September soybeans fell 21.75 cents ending at $15.13 with September soybean meal down $16.00 per ton closing at $462.40. September wheat fell 21.75 cents closing at $7.982. August live cattle gained $0.95 ending at $142.50. October crude oil fell $5.37 ending at $91.64 per barrel. The DOW fell 308 points closing at 31,791 while the NASDAQ declined 135 points ending at 11,883.
