Friday Closing Dairy Market Update - August Income Over Feed Is Down

MILK:

Class III milk futures closed out the week at the low end of the trading range it has been mid-July. The up-and-down movement of underlying cash leaves little market direction keeping traders cautious and taking only short-term positions rather than trading in a long-term direction. This keeps milk futures volatile and unpredictable. USDA released the August Agricultural Prices report which shows some surprising changes of prices. First, the average corn price declined one cent from July to $7.24 per bushel. The big change took place in soybean meal with the average August price being $510.90 per ton, an increase of $43.03 per ton from July. Premium/supreme hay increased $10.00 per ton to an average of $343.00. These feed prices against the All-milk price of $24.30 moved income over feed to $8.08. The All-milk price declined $1.40 from July. There will be a payment of $1.42 per cwt for those who chose the $9.50 level under the Dairy Margin Coverage program. This is the lowest income over feed since September 2021.

AVERAGE CLASS III PRICES:

3 Month:	$20.74
6 Month:	$20.52
9 Month:	$20.43
12 Month:	$20.39

CHEESE:

For the week, blocks gained 0.75 cents with 3 loads traded. Barrels gained 1.50 cents with 10 loads traded. Dry whey declined a penny with 2 loads traded. Spot trading activity was light as buyers either did not need to be aggressive this week for cheese in general or they were able to obtain sufficient supply in the country through regular channels reducing the need to come to the spot market to purchase. There is sufficient supply of fresh cheese for demand with aged cheese in inventory rather burdensome at a record high.

BUTTER:

For the week, butter increased 1.25 cents with 32 loads traded. Grade A nonfat dry milk decreased a penny with 5 loads traded. Price has not moved much this week as buyers and sellers are comfortable doing business at this level. Buyers see limited downside risk with sellers seeing limited upside potential.

OUTSIDE MARKETS SUMMARY:

December corn gained 8 cents closing at $6.7750. November soybeans fell 46 cents closing at $13.6475 with October soybean meal down $5.90 ending at $403.20 per ton. December wheat gained 25.25 cents closing at $9.2150. October live cattle declined $0.85 ending at $143.27. November crude oil declined $1.74 closing at $79.49 per barrel. The DOW fell 500 points closing at 28,726 while the NASDAQ declined 162 points closing at 10,576.

Friday Midday Dairy Market Summary - Barrels Fall Back

OUTSIDE MARKETS SUMMARY:

CORN:	15 Higher
SOYBEANS:	31 Lower
SOYBEAN MEAL:	$0.80 Higher
LIVE CATTLE:	$0.37 Lower
DOW JONES:	236 Points Lower
NASDAQ:	32 Points Lower
CRUDE OIL:	$1.24 Lower

MIDDAY MARKET UPDATE:

Block cheese price remained unchanged at $1.9675 with no loads traded. Barrel cheese price declined 4.50 cents ending at $2.20 with one load traded. Dry whey price remained unchanged at 44 cents with no loads traded. The weakness of barrels put pressure on Class III milk futures with some contracts suffering double-digit losses. Futures remain in the sideways pattern near the low end of that range. Butter price remained unchanged at $3.1450 with no loads traded. Grade A nonfat dry milk price gained 2 cents closing at $1.57 with one load traded. Class IV futures are 2-15 cents lower. Butter futures are 0.17 cents lower to 1.47 cents higher. Dry whey futures are unchanged to 0.95 cent higher. USDA will release the August Agricultural Prices report this afternoon.

Friday Morning Diary Market Update - Uncertainty Dominates Market

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Steady to 5 Lower
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	3 to 5 Higher
Soybean Futures:	4 to 6 Higher
Soybean Meal Futures:	$1 to $3 Lower
Wheat Futures:	8 to 11 Lower

MILK:

Milk production is at seasonally low levels and should increase over the coming weeks. Milk supply has tightened in some areas as demand for fluid milk is strong and manufacturers are trying to increase production for upcoming demand. There currently is no shortage of milk. Those who are looking for extra milk to process find spot milk at prices even with class to as much as $1.00 over class. Orders are being placed earlier than usual as end users want to give extra time for orders to be filled and in place when they need product. USDA will release the Quarterly Grain Stocks report Friday morning, which may provide some direction to grain prices. This will not directly impact milk futures, but it may show a trend for grain prices. The August Agricultural Prices report will be released Friday afternoon and will provide the average prices for the month used in calculating income over feed for the Dairy Margin Coverage program. I do not expect there to be any payment again for August, but it may be very close to the $9.50 trigger level.

CHEESE:

Block cheese price continues to struggle as supply is more readily available in the country compared to barrels. Buyers have been able to procure sufficient supply of fresh cheese through regular channels rather than having to rely on the daily spot market. Plants are not holding on to cheese in the hope that price may trend higher. They want to move product due to demand concerns once holiday buying is finished. Spot prices may continue to remain choppy.

BUTTER:

Price is going nowhere as buyers and sellers are comfortable doing business at the current level. There is little downside price risk, keeping buyers actively increasing ownership. There is limited upside as the record price seen earlier seems to have been a price ceiling. High retail prices may slow demand somewhat during the rest of the year.

Thursday Closing Dairy Market Update - Milk Supply Tightens, Demand Up

MILK:

Both milk production per cow and components have been higher than last year. Better components increase cheese yield. However, there are more reports of milk supply becoming tighter in some regions. This is being reflected in the increase in spot milk prices. With the impact of hurricane Ian in the southeast, the movement of milk might be slowed. However, that will return to normal in a few weeks again. Traders are not moving milk futures in the anticipation of where prices will go but rather are keeping prices more in line with underlying cash. This indicates an uncertainty over the level of demand moving through the end of the year. Traders would rather be cautious rather than anticipate price strength as outside markets are having an impact on trader psychology. USDA will release the Quarterly Grain Stocks report tomorrow which may have some impact on milk futures but likely will not have an impact on spot trading. The August Agricultural Prices report will also be released providing the average prices used for income over feed for the Dairy Margin Coverage program. I do not expect a payment to be rendered for the month.

AVERAGE CLASS III PRICES:

3 Month:	$20.87
6 Month:	$20.62
9 Month:	$20.49
12 Month:	$20.46

CHEESE:

There are some reports of good demand which has tightened the supply of cheese at the manufacturing level. There are also reports of retail cheese demand slowing as high food prices have caused some consumers to reduce some of their purchases. Some of this difference may be variety specific. Pizza cheese demand has been strong. International demand has been strong but that may decrease over time due to the strong U.S. Dollar. The block/barrel spread moved to an inverted 27.75 cents. This is not the widest it has ever been, but it is extremely wide indicating more availability of blocks versus barrels.

BUTTER:

In general, butter plants are busy producing butter to fill orders and the attempt to keep inventory on hand. Even with the current high price, demand remains good both domestically and internationally. Some plants have decided to sell a portion of their cream rather than churn it. One reason may be due to the difficulty of finding employees. It may be difficult for price to set a new high as consumers face high grocery bills. This could slow demand to some extent.

OUTSIDE MARKETS SUMMARY:

December corn declined a penny to $6.6950. November soybeans gained 2 cents closing at $14.1075 with October soybean meal down $12.70 closing at $409.10 per ton. December wheat declined 7 cents closing at $8.9625. October live cattle jumped $1.07 ending at $14412. November crude oil declined $0.92 closing at $81.23 per barrel. The DOW fell 458 points ending at 29,226 while the NASDAQ dropped 314 points ending at 10,738.

Thursday Midday Dairy Market Summary - Cheese Prices Diverge Further

OUTSIDE MARKETS SUMMARY:

CORN:	1 Lower
SOYBEANS:	2 Higher
SOYBEAN MEAL:	$12.10 Lower
LIVE CATTLE:	$0.90 Higher
DOW JONES:	535 Points Lower
NASDAQ:	353 Points Lower
CRUDE OIL:	$0.34 Higher

MIDDAY MARKET UPDATE:

Blocks saw further pressure with price declining 2 cents, closing at $1.9675 with one load traded and two offers remaining at the closing price. Barrel price increased 4.50 cents, closing at $2.2450 with five loads traded and an unfilled bid remaining at the close. Dry whey price slipped 0.50 cent to 44 cents with one load traded. Class III futures are 24 cents lower to 12 cents higher. Futures were higher as traders anticipated strength of cheese prices, but further weakness of blocks trimmed those gains. Butter price declined 2 cents, closing at $3.1450 with five loads traded. Grade A nonfat dry milk price declined 1.25 cents, closing at $1.55 with four loads traded. Class IV futures are unchanged to 21 cents lower. Butter futures are 0.02 to 2.00 cents lower. Dry whey futures are unchanged to 0.50 cent higher.

Fluid Milk and Cream - Western U.S. Report 39

In California, cooler weather and increased cow comfort are contributing to higher milk     output. Contacts report milk production is below some previously forecasted levels and down    from September of 2021. Some plant managers say they continue to move spot milk loads to     other states, despite tightening milk volumes. Across all Classes, demand is steady. 

Milk production is steady in Arizona, though stakeholders say output is down compared to this     time last year. Some processors in the state are reducing their operating hours as they     complete regularly scheduled maintenance. Contacts report loads of milk are being sourced     from other parts of the region. Class I and III demands are steady, but lighter demand is     present for Class II. 

In New Mexico, milk production is unchanged this week. Milk output remains below 2021 as contacts say statewide herd populations are down from a year ago. Some processors in the state say they are running lighter schedules, as they complete regularly scheduled maintenance. Demand for all Classes is steady. 

Milk production is unchanged in the Pacific Northwest. Contacts in the area say cooler fall temperatures are likely to contribute to higher farm level milk output in the coming weeks. Milk volumes are tightening, though some processors say they continue to sell loads. Demand is steady across all Classes. 

Milk output is steady in the mountain states of Idaho, Utah, and Colorado. Some plant managers in the region say they have inventories of milk to sell, while others are increasing their purchasing. Loads of milk are being sold to other parts of the West. Across all Classes demand is steady. 

Condensed skim demand is strong in the West. Contacts report contract purchasers are pulling heavily on tightening supplies. Some spot purchasers say condensed skim loads are becoming more difficult to find. Cream volumes are becoming more available in the region, though contacts note supplies remain somewhat limited. Demand for cream from ice cream makers is declining but remains strong for butter makers. Contacts report cream multiples have continued to move lower in the region.

     Western U.S., F.O.B. Cream
     Price Range - All Classes; $/LB Butterfat:   3.4166 - 4.2629
     Multiples Range - All Classes:               1.0900 - 1.3600
     Price Range - Class II; $/LB Butterfat:      3.8554 - 4.2629
     Multiples Range - Class II:                  1.2300 - 1.3600

Thursday Morning Dairy Market Update - Traders May Wait For Cash Direction

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	3 to 6 Higher
Soybean Futures:	10 to 15 Higher
Soybean Meal Futures:	Mixed
Wheat Futures:	7 to 10 Higher

MILK:

The strength of Class III futures Wednesday was a bit of a surprise due to mixed underlying cheese prices. At times, weakness of block cheese results in selling of Class III futures, but not yesterday. Strength stemmed from the fact that a load was traded Wednesday rather than price declining on an offer without any buyers. The strength of barrels then provided further support. Milk supply has tightened in some areas as demand for Class I milk has increased and milk production remains at lower levels. Milk receipts at the plant level are expected to improve over the next weeks as cow comfort improves and milk per cow increases. The decision by Foremost Farms to reduce the pay to their patrons through the end of the year or longer will have a definite and disastrous impact on those farms. Farms are struggling with higher costs as much as the plants are, but the farms have nowhere else to turn.

CHEESE:

Prices are expected to continue to chop around as buyers and sellers take care of business. Sellers are not holding back supply in the anticipation prices may improve as holiday buying increases. They are moving supply as they have it due to the uncertainty over holiday demand and potentially slower demand into next year. Some varieties of cheese are moving well.

BUTTER:

Price is trending sideways as supply and demand are balanced. Butter production is not expected to increase very much more through the end of the year. Some plants are selling some cream due to demand from cream cheese producers and an attractive price. Butter inventory is expected to decline further through the end of the year.

Wednesday Closing Dairy Market Update - Class III Futures Post Strong Gains

MILK:

Class III milk futures posted some nice gains with October gaining 56 cents. It is interesting to see the uncertainty of traders as this market chops around. There is concern over ongoing demand due to increased interest rates and increasing food prices. The market may be buoyed by holiday buying for the time being, but the real test of the market will be after that is over and it settles down to regular consumer demand in the post-holiday period. I know that is a way off, but it is something to think about and how that will impact the market. Grain prices will have an influence on the level of milk production that will be seen. Milk production is trending higher and is expected to remain that way in the near term as production per cow will increase as weather becomes more conducive for cow comfort. Dairy Market News reports manufacturing milk supplies in the Northeast and Mid-Atlantic regions are very tight as there is strong Class I demand. Milk continues to move to deficit areas to satisfy fluid demand. Tighter manufacturing supplies might be positive at the present time as maybe it will deplete inventory a bit more. With fresh cheese in demand, it may result in higher cheese prices which would support higher milk futures.

AVERAGE CLASS III PRICES:

3 Month:	$20.89
6 Month:	$20.71
9 Month:	$20.56
12 Month:	$20.49

CHEESE:

Barrels are in a tighter position than blocks which is why the prices are inverted. This does not necessarily make the market lean in one direction or the other, but it does indicate strong demand for one category of cheese. Spot milk prices this week range from class to $1.00 over class. This leaves some cheese plants with some downtime as they are unwilling to pay the extra for milk supply in an uncertain market.

BUTTER:

Butter supplies are tighter in some areas with buyers looking to increase ownership to satisfy holiday demand. With higher demand for cream, some manufacturers are opting to sell cream at an attractive price to cream cheese manufacturers. This reduces the production of butter further tightening supply. However, even with a tighter supply, consumers may not be willing to pay the high prices in the stores and may purchase less. It will be interesting to see if butter will be used as a loss leader this year as much as it has been in the past.

I will be at the World Dairy Expo this year in Madison, Wisconsin in the AgMarket.net booth TC 664 located in the Trade Center. If you are making plans to attend, please stop by the booth to say Hi and see what we have to offer. The dates for the trade show are October 4-7.

OUTSIDE MARKETS SUMMARY:

December corn gained 3 cents closing at $6.7050. November soybeans gained 0.75 cents closing at $14.0875 with October soybean meal down $4.30 per ton closing at $421.80. December wheat jumped 31.75 cents ending at $9.0325. October live cattle declined $0.52 closing at $143.05. November crude oil jumped $3.65 closing at $82.15 per barrel. The DOW jumped 549 points closing at 29,684 while the NASDAQ gained 222 points closing at 11,052.

Wednesday Midday Dairy Market Summary - Class III Futures Find Strength

OUTSIDE MARKETS SUMMARY:

CORN:	3 Higher
SOYBEANS:	1 Lower
SOYBEAN MEAL:	$4.40 Lower
LIVE CATTLE:	$0.45 Lower
DOW JONES:	439 Points Higher
NASDAQ:	142 Points Higher
CRUDE OIL:	$3.28 Higher

MIDDAY MARKET UPDATE:

Block cheese price declined 1.75 cents, closing at $1.99 with one load traded. The fact that a load was traded likely provided some support to the market. Barrel price increased 3 cents, closing at $2.20 with four loads traded. This gain offset the weakness of blocks, keeping Class III futures in the positive. Dry whey price remained unchanged at 44.50 cents with no loads traded. Class III futures are 1 to 50 cents higher with October showing the greatest gain. Butter price gained a penny, closing at $3.1650 with four loads traded. Grade A nonfat dry milk price remained unchanged at $1.5625 with no loads traded. Class IV futures are 13 cents lower to 6 cents higher. Butter futures are 1.50 cents lower to 2.42 cents higher. Dry whey futures are steady to 0.27 cent lower.

Wednesday Morning Dairy Market Update - Markets Show Little Direction

OPENING CALLS:

Class III Milk Futures:	5 to 10 Higher
Class IV Milk Futures:	Steady to 5 Higher
Butter Futures:	Steady to 1 Higher

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	Mixed
Soybean Futures:	3 to 5 Lower
Soybean Meal Futures:	Mixed
Wheat Futures:	8 to 12 Higher

MILK:

Milk futures were mixed following the pattern of underlying cash. Traders remain somewhat bearish to Class III prices and neutral to Class IV prices. The trend of increasing milk production and cow numbers may leave a limited upside price potential for the time being. Sufficient milk supply will keep both bottlers and manufacturers satisfied. Demand will need to improve to keep pace or supplies will end the year higher than a year ago. There is much concern over demand as inflation and interest rates continue to rise. Consumers continue to face higher food prices at grocery stores. The strong U.S. dollar may also have some influence of the level of exports moving forward. Demand over the next few months will be critical for prices moving into next year.

CHEESE:

Spot cheese prices found no buyer interest Tuesday, but sellers were also not very aggressive. Price may continue to chop around for a period of time, establishing a sideways trend. Buyers of cheese have been able to purchase what they need without difficulty with much being done through regular channels. This limits the amount they need to purchase on the daily spot market.

BUTTER:

The high has likely been established in butter for the year with buyers and sellers comfortable at the current price. Business is being done with buyers concerned over supply through the end of the year. The fact that 23 loads of butter were traded during spot trading Tuesday indicates demand remains strong and buyers are not only filling orders but also increasing ownership for fill-in demand as the year progresses.

Tuesday Closing Dairy Market Update - Milk Futures Mixed

MILK:

Milk futures closed mixed with Class III contracts showing gains through January and lower prices thereafter. Class IV futures were mixed across the board. Trading activity was rather light and confined to the October and November Class III contracts. Traders are uncertain of what the market will do this week. Milk production is beginning to improve seasonally but certainly not by leaps and bounds. South Dairy Trade numbers and prices were released today. There were 12,810.23 tons of dairy products moved through the ports of Uruguay during the period from September 1st through September 15 going to 27 destinations. The average price per ton was $4,298.00 or $1.95 per pound. Whole milk powder declined 2.9% from the previous report to $4,123.49 per ton or $1.87 per pound. Skim milk powder gained 3.7% to $4,242.41 per ton or $1.93 per pound. Semi-hard cheese declined 2.2% to $4,884.61 per ton or $2.22 per pound. Hard cheese jumped 11.9% from the previous report to $6,093.79 per ton or $2.77 per pound. Butter declined 1.7% to $5,584.00 per ton or $2.54 per pound with buttermilk down 5.3% to $4,355.78 per ton or $1.98 per pound. For the period of August 1 through August 15, ports in Argentina moved 9,040.08 tons of dairy products to 21 destinations at an average price of $4,476.73 per ton or $2.03 per pound. Whole milk powder increased 1.1% to $4,264.34 per ton or $1.94 per pound. Skim milk powder declined 2.8% to $3,910.09 per ton or $1.78 per pound. Semi-hard cheese declined $4,808.41 or $2.18 per pound. Hard cheese gained 6.6% to $6,626.31 per ton or $3.00 per pound. Butter increased 0.6% to $5,250.70 per ton or $2.38 per pound.

AVERAGE CLASS III PRICES:

3 Month:	$20.56
6 Month:	$20.39
9 Month:	$20.32
12 Month:	$20.31

CHEESE:

Buyers and sellers of cheese are not excited about doing business on expectations but rather on reality. Buyers need to feel confident demand is going to hold up through the holidays and are purchasing as orders surface. Sellers are moving supply as they have it rather than speculate on higher prices through the end of the year. This keeps the market choppy and traders scratching their heads. Price fluctuations will be the norm for a period of time.

BUTTER:

Price is expected to remain range bound for much the same reason as cheese, but at s much higher price level. The heavy trading activity in cash today indicates good demand as the fall progresses. A price much higher than the current level risks a slowing of demand. The high has likely been established for the rest of the year.

OUTSIDE MARKETS SUMMARY:

December corn gained 1.25 cents closing at $6.6750. November soybeans declined 3.25 cents closing at $14.08 with October soybean meal down $6.50 per ton closing at $426.10. December wheat gained 13.50 cents ending at $8.7150. October live cattle gained $0.10 closing at $143.57. November crude oil gained $1.79 per barrel ending at $78.50. The DOW declined 126 points ending at 29,135 while the NASDAQ gained 27 points closing at 10,830.

Tuesday Midday Dairy Market Summary - Cheese Prices Slip

OUTSIDE MARKETS SUMMARY:

CORN:	3 Higher
SOYBEANS:	7 Higher
SOYBEAN MEAL:	$4.30 Lower
LIVE CATTLE:	$0.12 Higher
DOW JONES:	143 Points Lower
NASDAQ:	6 Points Lower
CRUDE OIL:	$1.19 Higher

MIDDAY MARKET UPDATE:

There was anticipation of a further rebound of block cheese prices but that was not the case. Block price slipped 0.25 cent, closing at $2.0075 with no loads traded. Barrel cheese price declined 0.50 cent, closing at $2.17 with no loads traded. There was only one offer for a load of blocks and one for a load of barrels posted during spot trading. Buyers were nowhere to be seen. Dry whey price declined 0.75 cent, closing at 44.50 cents with no loads traded. There were two unfilled bids and two uncovered offers remaining at the close. Class III futures were quite a bit higher prior to spot trading but slipped back as cheese prices showed weakness. However, contracts are holding well with futures 7 cents lower to 50 cents higher. Butter price increased 2.25 cents, closing at $3.1550 with 23 loads traded. Buyers came out of the woodwork looking for butter and sellers had it for sale. There was an offer for one load remaining at the close. Grade A nonfat dry milk price declined 1.75 cents, closing at $1.5625 with no loads traded. Class IV futures are 10 cents lower to 8 cents higher. Butter futures are 0.30 lower to 2.52 cents higher. Dry whey futures are 0.25 to 1.00 cents higher.

Dairy product demand remains strong

Milk production forecasts for 2022 and 2023 were lowered from last month in the latest World Agricultural Supply and Demand Estimates report.

Milk cow numbers were reduced, reflecting the July numbers in the recent milk production report. Slower growth in cow numbers is expected through late 2022 and into 2023, says U.S. Department of Agriculture. Output-per-cow was forecast to increase at a slightly more rapid pace in 2022, but the forecast for 2023 was unchanged.

2022 production and marketings were estimated at 226.5 and 225.4 billion pounds, respectively, down 300 million pounds on both from last month’s estimates. If realized, 2022 production and marketings would only be up 200 million pounds or just 0.1% from 2021.

2023 production and marketings were estimated at 228.8 and 227.7 billion pounds, respectively, down 400 million pounds on both from a month ago. If realized, 2023 production and marketings would be up 2.3 billion pounds, or 1%, from 2022.

Forecasts for 2022 butter prices and nonfat dry milk were raised slightly on current price strength, but cheese and whey was unchanged. Butter was projected to average $2.85 per pound in 2022, up 6.50 cents from a month ago and compares to $1.7325 in 2021. The 2023 average was estimated at $2.3850, up a penny from last month’s estimate.

Cheese was still projected to average $2.0750 per pound in 2022, up from $1.6755 in 2021, and the 2023 average was estimated at $1.97, down 50 cents from last month’s estimate.

Nonfat dry milk will average $1.69 in 2022, up 2.50 cents from last month’s estimate and compares to $1.2693 in 2021. The 2023 average was put at $1.5050, up 5.50 cents from a month ago.

The dry whey average was left at 61 cents per pound, up from 57.44 cents in 2021, and the 2023 average is expected to drop to 48.50 cents per pound, unchanged from what was expected a month ago.

Class III and Class IV milk prices were raised. The 2022 Class III should average $21.65 per hundredweight, up a nickel from last month’s estimate and compares to $17.08 in 2021. The 2023 average was left at $19.70.

The 2022 Class IV will average $24.45, up 50 cents from a month ago and compares to $16.09 in 2021. The 2023 average was raised 50 cents to $20.85.

The WASDE news in feed grains wasn’t encouraging. The corn outlook is for lower supplies, smaller feed and residual use, reduced exports and corn used for ethanol, and tighter ending stocks. Projected beginning stocks were 5 million bushels lower based on essentially offsetting export and corn used for ethanol.

Corn production was forecast at 13.9 billion bushels, down 415 million, or 3%, from last month’s estimate, and down 8% from 2021, based on reductions to harvested area and yield. The national yield is forecast at 172.5 bushels per acre, down 2.9 bushels from a month ago and down 4.5 bushels from last year. Total planted area, at 88.6 million acres, is down 1% from the previous estimate and down 5% from the previous year. Area harvested for grain is forecast at 80.8 million acres, down 1% from the previous forecast and down 5% from a year ago.

Exports were cut 100 million bushels to 2.3 billion, while corn used for ethanol was lowered 50 million to 5.3 billion. With supply falling more than use, ending stocks are down 169 million bushels to 1.2 billion. The season-average corn price was raised 10 cents to $6.75 per bushel.The soybean story is for higher beginning stocks and lower production, crush, exports and ending stocks. Higher beginning stocks reflect a lower export forecast for 2021-22, says the WASDE.

Soybean production was projected at 4.38 billion bushels, down 152 million, or 3%, from a month ago, with lower harvested area and yield. Yields are expected to average 50.5 bushels per acre, down 1.4 bushels from the previous forecast and down 0.9 bushel from 2021. Total planted area, at 87.5 million acres, is down 1% from the previous estimate but up less than 1% from the previous year. Area harvested was forecast at 86.6 million acres, down 1% from the previous forecast, but up less than 1% from 2021.

The season-average soybean price was forecast at $14.35 per bushel, unchanged from last month. Soybean meal and oil prices were also unchanged at $390 per short ton and 69.0 cents per pound, respectively, says the USDA.

The latest crop progress report shows 77% of U.S. corn dented, as of the week ending Sept. 11, 8% behind a year ago and 2% behind the five-year average. 25% is rated mature, 10% behind a year ago and 5% behind the average. Harvest is at 5%. Condition wise, 53% is rated good to excellent, 5% behind a year ago.

The report also shows 97% of the soybeans setting pods, with 22% dropping leaves, 13% behind a year ago and 6% behind the five-year average. 56% of the beans are rated good to excellent, 1% behind a year ago.

The Global Dairy Trades fourth pulse auction was held Sept. 13 with 2.1 million pounds of Fonterra whole milk powder sold out of 2.2 million offered. The price averaged $3,565 per metric ton, up $25 from last week’s main GDT and up $150 from Aug. 30. There were 35 participating bidders with nine winning.

Back home, mid-September dairy prices strengthened as the nation was relieved to hear that a national rail strike was averted sparing additional woes to an inflation-troubled economy. Even as the industry awaited Monday’s August milk production report, most attention this week was on butter which soared 7 cents Tuesday to an all-time high $3.24 per pound, with one sale hitting $3.25.

It was short-lived and fell the next day, but bested the previous record by 10.50 cents. It ultimately fell to a Friday close at $3.1325, down 3.75 cents on the week but $1.3425 above a year ago. There was a total of 14 cars sold on the week.

Dairy Market News reports cream availability for butter production has yo-yoed quite a bit the past month, but this week it is tighter. Very few spot loads were offered at prices enticing enough for butter makers to act on.

Butter inventories are tight. and there is growing concern about end-of-year stocks, as retailers prepare for holiday ordering. Butter production is trending toward micro-fixing, exclusively, according to DMN, and all of these factors pushed the price to record highs.

Demand for cream is strong in the West, and cream volumes are tight amid high temperatures and declining milk output. Butter production was steady to lower this week, somewhat limited by the cream supply. Demand for butter is unchanged in food service markets and strengthening in retail as grocers prepare for the baking season. Demand for bulk butter is strong, but inventories are tight. Some traders expect high prices to persist in the coming months, warns DMN.

Cheddar block cheese topped $2 per pound Wednesday, first time since mid-July, and closed the third Friday of the month at $2.06, up 14.25 cents on the week, after gaining 15.25 cents the previous week and 26.75 cents above a year ago.

The barrels finished at $2.09, 15.75 cents higher, 58 cents above a year ago and 3 cents above the blocks. Sales totaled three cars of block and nine of barrel.

A growing number of cheesemakers tell DMN that inventories are tightening in the Midwest. Barrel producers say retailers are starting to plan end-of-year holiday orders and are concerned regarding their production capacity and whether it will meet those needs. Adding to the concern is milk availability. Cheese manufacturers say milk is down by a noticeable amount the past few weeks. Spot milk discounts were not reported the previous week, and mid-week prices this week were at Class or slightly over. CME cheese prices are mirroring the current supply/demand tones, says DMN.

Demand for cheese is strengthening in both retail and food service markets in the West. Sales of mozzarella are increasing to pizza makers. Export demand is also trending higher, as U.S. prices are below cheese produced in other countries. Inventories of barrels and blocks are tightening. Cheesemakers are running steady schedules, despite seasonally declining milk output. Labor shortages and continued delayed deliveries of supplies continues limit output in some plants.

Grade A nonfat dry milk climbed to $1.5875 per pound Monday, highest since Aug. 3, but finished Friday at $1.57, down 0.50 cents on the week but 22 cents above a year ago, with 25 sales reported on the week.

Whey got to 49.75 cents per pound Tuesday, highest since July 5, but fell to a 46-cent close, up 0.25 cent on the week but 0.75 cent below a year ago on three sales.

 Prices need to strengthen more to shore up milk prices. The Sept. 9 Dairy and Food Market Analyst reports farms are calling it quits, particularly in the West where farm-level margins are translating into more sales at the auction block.

A&M Livestock lists three dairy dispersals in California in the next three weeks, says the Analyst, and we are told auction houses are booked out. Farm exits are happening faster than expected. But also, August was the first month that many California milk producers experienced below cost of production milk prices. Break-evens in the Golden State are now about $24 per cwt, according to the Analyst, nearly $4 more than the announced August Class III milk price.

Dairy culling in the week ending Sept. 3 totaled 55,600 dairy cows, down 4,400 head from the previous week and 3,200 head, or 5.4%, below a year ago.

On a brighter note, dairy product demand was mostly positive in July, according to HighGround Dairy’s Lucas Fuess in the Sept. 19 Dairy Radio Now broadcast. Fuess said there were red flags this summer as to how consumers would react to inflation and affect their dairy purchases.

The USDA’s latest data answered that question. Cheese utilization totaled 1.165 billion pounds, down 5.1% from June but 0.5% above July 2021, with year-to-date up 1.9%. Domestic utilization was up 0.4% from a year ago, and exports were up 1.6%, with YTD exports up 14.6%.

Cheese demand was above a year ago for the third consecutive month, but Fuess said the increase came from the other category, as American utilization was down for the fourth consecutive month, hurt by weak domestic demand.

Butter utilization totaled 180.6 million pounds, up 10.3% from June and 4.2% above a year ago, with domestic use up 0.8% from a year ago. Exports were up 78.7%, he said; however, YTD utilization remained below the first seven months of 2021, hurt especially by weakness in February and March. Butter exports were close to record highs, says HGD, but represent a small share of total utilization.

Nonfat dry milk utilization, at 197.3 million pounds, was down 17.4% from a year ago, down for the second consecutive month and the sixth time this year, as exports struggle, Fuess said. Domestic usage was also down, and that’s been the trend for the past several years. It’s likely that export demand will continue to underperform last year’s impressive sum in the coming months, with weaker shipments negatively impacting utilization into third and fourth quarter.

Dry whey totaled 86 million pounds, up 13.9% from 2021, as commercial utilization posted its third consecutive monthly gain, climbing to the highest volume of any month since October 2020, says HGD. Exports performed poorly the first several months, but July saw the second consecutive year-over-year gain.

Demand continues to falter in fluid milk. USDA’s latest data shows sales of U.S. packaged fluid products totaled 3.3 billion pounds in July, down 5% from July 2021. Conventional product sales totaled 3.1 billion pounds, down 5.4% from a year ago. Organic products, at 228 million pounds, were off 0.3% and represented 6.9% of total sales for the month.

Whole milk sales totaled 1.2 billion pounds, down 1.3% from a year ago, but 0.9% higher YTD and represented 34.1% of total milk sales YTD.

Skim milk sales, at 176 million pounds, were down 12.2% from a year ago and down 8.3% YTD.

Total packaged fluid sales for the seven-month period amounted to 24.9 billion pounds, down 2.6% from 2021. Conventional product sales totaled 23.3 billion pounds, down 2.7%. Organic products, at 1.7 billion, were down 2% and represented 6.7% of total milk sales for the period.
The figures represent consumption in Federal Milk Marketing Order areas, which account for approximately 92% of total fluid milk sales in the U.S.

Cooperatives Working Together members accepted five offers of export assistance this week to help capture sales of 3.7 million pounds of American-type cheese and 42,000 pounds of whole milk powder. The product is going to customers in Asia, Middle East-North Africa, Oceania and South America through February.

CWT’s 2022 sales total 73.8 million pounds of American-type cheeses, 459,000 pounds of butter, 29.8 million pounds of whole milk powder and 7.1 million pounds of cream cheese. The products are going to 18 countries and are the equivalent of 965 million pounds of milk on a milkfat basis.

Tuesday Morning Dairy Market Update - Milk Futures Set to Rebound

OPENING CALLS:

Class III Milk Futures:	10 to 20 Higher
Class IV Milk Futures:	5 to 10 Higher
Butter Futures:	Steady to 1 Higher

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	2 to 3 Higher
Soybean Futures:	8 to 11 Higher
Soybean Meal Futures:	$2 to $3 Higher
Wheat Futures:	10 to 15 Higher

MILK:

Milk futures succumbed to the selling pressure, running rampant across the commodity markets. Last week, traders focused on the weakness of block cheese, resulting in lower Class III milk futures. The higher block cheese price Monday had no real impact on futures as selling was influenced by what took place in the outside markets. Overnight, futures showed double-digit gains as the attention has turned back to underlying cash. If lower blocks influenced futures negatively last week, higher blocks should influence futures this week. However, there remains concern over the impact on demand due to increasing interest rates and high inflation. This is the time of year during which demand is strong and buying should be aggressive. However, demand is uncertain, leaving the market searching for direction.

CHEESE:

Block cheese uncovered buying interest at the lower price. Buyers may be more aggressive this week as they continue to purchase cheese for the holiday period. There is a strong possibility that blocks can regain the ground they lost last week as barrels remain supported and holiday and ongoing demand buying will continue.

BUTTER:

Price should hold in a sideways pattern for a period as demand is being fulfilled. However, once holiday buying is finished, price may decline to some extent. Butter futures are showing a discount through the end of the year and into next year. But even at that, price is expected to hold at historically high levels. Price should remain choppy.

Monday Closing Dairy Market Update - Milk Futures Decline

MILK:

Milk production has been mostly flat to declining. Loads of milk have stabilized and transporting milk to schools and other places has been undisruptive for the most part. Fluid milk from the Midwest is being delivered to places in the South since it's a little more available and meeting most of their needs. Cream availability is tight; certain places are looking for additional loads. Ice cream producers have slowed down on cream purchasing as summer came to an end, while cream cheese producers have picked up speed.

AVERAGE CLASS III PRICES:

3 Month:	$20.33
6 Month:	$20.23
9 Month:	$20.24
12 Month:	$20.35

CHEESE:

Spot cheese price for blocks saw an increase of 5 cents, but barrel prices are still higher despite being a penny shorter. Milk volume is starting to tighten for cheesemakers despite running steady production schedules. Some plants aren't able to run full schedules due to employee shortages and supply delivery delays. Cheese export demand is strong and supports stronger domestic pricing. Demand in the food service and retail sectors are steady to lower as store prices climb higher. Cheese inventory is available. Nonfat dry milk spot price was unmoved in price and in trading, while dry whey had a 0.25 uptick in price at $0.4525.

BUTTER:

Butter saw no trading activity and no movement in price. Demand is picking up as the fall holiday season approaches. Production is held back a bit as butter manufacturers are not churning, using cream for other uses. Cream isn't as available on the spot market. Higher market prices are keeping shoppers from making more butter purchases, and buyers hope supply will become more available with better prices. Food service demand is steady -- only buying what they need in the near-term. Bulk butter demand is strong. Loads of unsalted butter are harder to come by compared to salted butter.

OUTSIDE MARKETS SUMMARY:

December corn fell 10.50 cents, closing at $6.6625 per bushel. November soybeans were down 14.50 cents to $14.1125 per bushel. October soybean meal down $7.30 to close at $432.60 per ton. December wheat settled at $9.5800, falling 22 cents. October live cattle declined $0.77 to close at $143.47. November crude oil fell $2.07 to settle at $76.67 per barrel. The DOW declined 330 points, ending at 29,260. NASDAQ was down 65 points to close at 10,802.

Monday Midday Dairy Market Summary - Block Cheese Rises

OUTSIDE MARKETS SUMMARY:

CORN:	7.50 lower
SOYBEANS:	12.25 Lower
SOYBEAN MEAL:	$2.50 Lower
LIVE CATTLE:	$1.075 Lower
DOW JONES:	279 Points Lower
NASDAQ:	42 Points Lower
CRUDE OIL:	$1.54 Lower

MIDDAY MARKET UPDATE:

Block cheese price jumped 5 cents to $2.0100 with one load traded. Barrels declined 1 cent to $2.1750 with no loads traded. Dry whey was up 0.25 cent, ending at $0.4525 with one load traded. Nonfat dry milk price was unchanged at $1.5800 with no loads traded. Butter also saw no change, ending with $3.1325 with no loads traded. Butter futures were up 0.70 cent to 0.45 cent lower. Class III futures ranged from 10 higher cents to 0.25 cent lower. Class IV contracts were priced at $23.55 to $24.65 midday.

Monday Morning Dairy Market Update - Choppy Trading Expected

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Steady to 5 Higher
Butter Futures:	Steady to 1 Higher

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	3 to 5 Lower
Soybean Futures:	3 to 5 Lower
Soybean Meal Futures:	$1 to $3 Lower
Wheat Futures:	8 to 11 Lower

MILK:

There was pressure most of last week on milk futures. The weakness of block cheese was the driving force with a decline on the week of 10 cents. This was offset by the increase of barrels of 9.50 cents, but traders focused on blocks. After this realization and having the weekend to think about why milk futures declined, traders may decide to buy the market either through short-covering or in the realization that futures should not have declined as they had. However, the futures market is an anticipatory market and traders felt the outlook was not as friendly as it was the previous week. Outside pressure was also put on milk futures from the financial markets as the stock market fell and fears of a recession moved into the forefront of concerns. Milk production is holding at lower levels or increasing depending on area of the country.

CHEESE:

Block cheese price may have fallen enough to get the interest of buyers. There is demand for fresh cheese and the holiday buying is still ongoing. There are some reports that manufacturers stocks have tightened, resulting in some plants limiting the amount of cheese for filling orders for the time being. This does not seem to be widespread, but it should provide some support.

BUTTER:

Price may be in a holding pattern. Supply is tighter and demand is good. End users are concerned over the lower inventory and the inability of manufacturers to replenish inventory. The recent USDA Cold Storage report indicated inventory is losing ground to the previous year, which will result in significantly lower stocks at the end of the year than last year. High price may begin to slow some demand.

Friday Closing Dairy Market Update - Class III Futures Take a Large Hit

MILK

Traders piled on to the sell side of the market once further weakness was seen in the cheese complex. There are no Class III contracts above $21 to close out the week. The weakness of cheese prices has the most influence on the market, but the weakness of the stock market and further economic weakness also might have played a role. Most commodities were lower, as concern increased over demand as time moves forward. Dairy traders coupled the milk production report with the cold storage report and decided the market may have limited upside potential. Even with the time of year and the recent uptrend, traders are not shedding their bearish attitudes. The recent increase was not sufficient to change that attitude due to the fundamentals surrounding the market. It will take a tight fresh cheese market to push prices back up and higher than they had been. With milk production growing over a year ago, the market is poised to see more supply being available. After holiday demand is finished, prices may have limited upside.

AVERAGE CLASS III PRICES

3 Month:	$20.49
6 Month:	$20.45
9 Month:	$20.48
12 Month:	$20.50

CHEESE

There was quite a divergence between blocks and barrels this week. Block price declined 10 cents with 12 loads traded. Barrels increased 9.50 cents with 12 loads traded. This moved the price inversion between blocks and barrels to 22.50 cents. Barrel price being above blocks is becoming more normal. Dry whey price declined a penny for the week with four loads traded. Holiday buying should continue for the next month, but then the market may be in more trouble if consumers pull back due to high prices of everything.

BUTTER

For the week, butter remained unchanged with 13 loads traded. Grade A nonfat dry milk gained a penny with three loads traded. The cold storage report this week was friendly to butter with support remaining under the market likely through the end of the year. International demand has been very strong and is expected to remain that way for a while.

Buyers are concerned inventory will decrease further with the potential of lower supply stretching into next year.

I will be at the World Dairy Expo this year in Madison, Wisconsin, in the AgMarket.net booth TC 664 located in the Trade Center. If you are making plans to attend, please stop by the booth to say "Hi" and see what we have to offer. The dates for the trade show are Oct. 4-7.

OUTSIDE MARKETS SUMMARY

December corn fell 11.50 cents, closing at $6.7675. November soybeans fell 31.25 cents with October soybean meal down $6.00 per ton, closing at $439.90. December wheat fell 30.25 cents, closing at $8.8050. October live cattle declined $0.60, ending at $144.25. November crude oil fell $4.75, ending at $78.74 per barrel. The Dow lost 486 points, closing at 29,590, while the NASDAQ lost 199 points.

Friday Midday Dairy Market Summary - Milk Futures Fall

OUTSIDE MARKETS SUMMARY:

CORN:	8 lower
SOYBEANS:	28 Lower
SOYBEAN MEAL:	$5.50 Lower
LIVE CATTLE:	$0.55 Lower
DOW JONES:	625 Points Lower
NASDAQ:	252 Points Lower
CRUDE OIL:	$4.78 Lower

MIDDAY MARKET UPDATE:

Block cheese price declined 4 cents closing at $1.96 with one load traded. Barrels declined 0.50 cent ending at $2.1850 with three loads traded. Dry whey price increased a penny closing at 45 cents with one load traded. Traders did not like to see this weakness and quickly pressured futures. Contracts are unchanged to 57 cents lower. Overnight and earlier trade showed some strength as traders were friendly on the cold storage report, However, that was short-lived once spot trading took place. Butter price increased 0.25 cents closing at $3.1325 with one load traded. Class IV futures are mixed with contracts ranging from 41 cents lower to 15 cents higher. Butter futures are 0.50–4.00 cents lower. Dry whey futures are 1.00–1.50 cents lower.

Friday Morning Dairy Market Update - Milk Futures Show Strength After Cold Storage Report

OPENING CALLS:

Class III Milk Futures:	5 to 15 Higher
Class IV Milk Futures:	Steady to 5 Higher
Butter Futures:	Steady to 1 Higher

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	8 to 10 Lower
Soybean Futures:	12 to 14 Lower
Soybean Meal Futures:	$3 to $4 Lower
Wheat Futures:	12 to 16 Lower

MILK:

Milk futures are higher overnight in reaction to the August Cold Storage report. The fact that inventory declined in all categories indicated strong demand during the month. Seasonally, inventory should have declined, but the uncertainty over demand during the month made the decline more important than usual. This provided some buying interest in Class III futures overnight which should carry through Friday morning. Again, as was the case with the milk production report earlier this week, cash trading activity may not be influenced by the report as that has already been absorbed into the market. With milk production slowly beginning to improve and demand holding well, there should be sufficient supply for demand leaving the market following a season pattern. One caution is that a seasonal pattern generally shows a peak of milk prices in October.

CHEESE:

The weakness of blocks Thursday may have moved price to a level at which buyers may step up to the plate and take advantage of the decline. A strong barrel market may provide some spillover support to blocks. Although cheese inventory declined during August, the fact that the categories of other cheese and total cheese still showed record high inventories for the month.

BUTTER:

The bullish implications of butter inventory on the report should continue to provide support under the market. Stocks being 22% below a year ago clearly indicates inventory at the end of the year will close significantly below a year ago. This should provide support for quite some time as it will take a while to rebuild those stocks

Thursday Closing Dairy Market Update - Butter and Cheese Inventories Decline

MILK

Milk production has been holding steady generally over the past few weeks. With some of the cooler weather moving into areas, milk production is beginning to improve slowly. Milk continues to move from areas of surplus to deficit areas tightening spot milk availability and increasing prices. Spot milk is generally at class to $1.00 over class. There have been some reported offers running as much as $2.00 over class. Some areas report tightening milk supply as demand improves with manufacturers scrambling to fill orders of various varieties. Milk production continues to run better than expected based on what the estimates were at the end of last year. Culling has slowed and cow numbers are slowly increasing. Heifer availability at auctions is tight but farms are increasing cow numbers internally if they can. This will be a slower rate of growth limiting expansions, but it is growth, nonetheless.

AVERAGE CLASS III PRICES

3 Month:	$20.87
6 Month:	$20.94
9 Month:	$20.86
12 Month:	$20.80

CHEESE

USDA released the August Cold Storage report which showed declines in all categories. American cheese stocks declined 17.6 million pounds or 2% from July. Inventory remains 2% above a year ago at 842.4 million pounds. This is the first decline from July to August since 2019 but remains the highest inventory for August since 1985. Swiss cheese inventory declined 1.4 million pounds to 21.1 million pounds and 6% below a year ago. Other cheese inventory declined 19.1 million pounds to 620.3 million pounds but remains 6% above a year ago. Total cheese inventory was 1.484 billion pounds for the month, a decline of 38.1 million pounds remaining 4% higher than a year ago. The categories of other cheese and total cheese remains at record highs.

BUTTER

The cold storage report was friendly for butter with a significant decline of 32.5 million pounds for the month with inventory at 282.6 million pounds, a 10% decline. This decline was like last year with a similar decline back in 2015. The last time stocks were this low in August was in 2017. We can clearly see that stocks will end the year substantially below a year ago. This should continue to support the market.

OUTSIDE MARKETS SUMMARY

December corn gained 2.75 cents closing at $6.88.25. November soybeans declined 4.25 cents closing at $14.57 with October soybean meal down $8.80 per ton closing at $455.90. December wheat gained 7 cents closing at $9.1075. October live cattle declined $1.02 closing at $144.85. November crude oil gained $0.55 closing at $83.49 per barrel. The DOW declined 107 points ending at 30,077 while the NASDAQ declined 153 points closing at 11,067.