MILK
Class III milk futures did an about-face once traders realized cheese buyers were not influenced in the near term by the bearish implications of the August Milk Production report. Buyers and sellers are doing business according to the here and now rather than what was a month ago. The Global Dairy Trade auction trade weighted average increased 2.0% and the second consecutive increase. Anhydrous milk fat increased 4.0% to $5.901 per metric ton or $2.68 per pound. Butter decreased 0.2% to $5,356 per metric or $2.43 per pound. Cheddar cheese increased 2.1% to $5,147 per metric ton or $2.33 per pound. Skim milk powder decreased 0.7% to $3,547 per metric ton or $1.61per pound. Whole milk powder increased 3.7% to $3.733 per metric ton or $1.69 per pound. It was the first time that I can remember there were three categories of dairy products not offered. Buttermilk powder, lactose, and sweet whey powder.
AVERAGE CLASS III PRICES
| 3 Month: | $21.21 |
| 6 Month: | $21.26 |
| 9 Month: | $21.12 |
| 12 Month: | $21.00 |
CHEESE
Traders seem to anticipate the milk production report would influence the market more than it did. What was forgotten was that August milk production had already been absorbed into the market. Cheese prices began trending higher on August 29 with increasing production having no impact on the spot market. Demand for fresh cheese began to increase resulting in buyers having to come directly to the spot market to obtain supply that they were not able to get through regular channels. It is not a matter of an overall tighter market but the increase of demand for fresh product.
BUTTER
Price may be carving out a range as buyers and sellers seem comfortable at this level for the time being. Price seems rather high, yet buyers are willing to purchase feeling little risk to the downside. However, price may have reached a ceiling, but demand is expected to keep price elevated. USDA will release the August Cold Storage report Thursday which is expected to show an increase of inventory but not a gain on last year's level.
OUTSIDE MARKETS SUMMARY
December corn jumped 13.75 cents closing at $6.92. November soybeans jumped 17.50 cents ending at $14.7875 with October soybean meal up $12.60 per ton closing at $450.80. December wheat jumped 63.25 cents closing at $8.9375. October live cattle gained $0.57 ending at $146.30. October crude oil declined $1.28 closing at $84.45 per barrel. The DOW fell 313 points closing at 30,706 while the NASDAQ declined 110 points ending at 11,425.
