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.
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