MILK
The August milk production report was bearish showing a significant increase in milk production. This was above expectations since August was a hot month. Milk production in the top 24 states increased 1.7% from August 2021. Revised milk production for July was up 0.6% rather than the 0.3% initially reported. Milk production per cow averaged 2.041 pounds, up 37 pounds from a year ago. Cow numbers increased 8,000 head from July. Milk production in all 50 states increased 1.6%. Production per cow totaled 2,018 pounds and 34 pounds above a year ago. Cow numbers reached 9.43 million head, 8,000 more than July and only 11,000 less than a year ago. This was a surprising gain considering the summer we have had and the increase in cost of production. There were only 7 states of the top 24 states which showed production declines. Florida showed the largest decline at 10.4%. This was followed by Washington down 4.2%; New Mexico down 3.3%; Ohio down 2.5%; Indiana down 2.4%; Illinois down 2.1%; Michigan down 1.5% Virginia down 1.7% and Utah down 1.1%. The largest gain took place in Georgia with an increase of 14.8% followed by South Dakota with a gain of 14.5%. Texas gained 8.9% with Iowa up 6.9%. The rest of the states showed gains of 3.0% or less. This was bearish to the market resulting in immediate selling of Class III futures after prices had been settled for the day. Selling pressure will continue in overnight trading.
AVERAGE CLASS III PRICES
3 Month: | $20.96 |
6 Month: | $21.07 |
9 Month: | $20.99 |
12 Month: | $20.89 |
CHEESE
Cheese prices gave the indication there is support under the market. That may be true, but the bearishness of the milk production report may keep buyers from being very aggressive. One thing we need to bear in mind is that milk production during August has already been absorbed in the market. The higher milk prices in September unfolded anyway. The bearish reaction could be short-lived if underlying prices move higher.
BUTTER
Buyers wanted to take advantage of the lower price from last week and stepped in more aggressively today. It is difficult to know just how prices will move but they may settle into a sideways pattern for a period of time as supply and demand is measured. Price may continue to increase further on Tuesday.
OUTSIDE MARKETS SUMMARY
December corn gained a penny closing at $6.7825. November soybeans gained 12.75 cents closing at $14.6125 with October soybean meal up $8.60 per ton closing at $438.20. December wheat fell 29.25 cents closing at $8.3050. October live cattle gained $0.22 closing at $145.72. October crude oil gained $0.62 closing at $85.73 per barrel. The DOW gained 197 points closing at 31,020 while the NASDAQ gained 87 points closing at 11,535.