MILK
Class III futures showed some of the largest price increases that were maintained into the close in quite some time. October closed just a penny off their highs posting a gain of 74 cents. There are now 7 contracts above $21.00 with two of those contracts above $22.00. The market has the feeling that it may have turned a corner for the time being. However, the rally may be fueled more by a fear of higher prices rather than fundamentals pushing it higher. We certainly will take what we can get with hopefully stronger prices to continue to help with the higher cost of production. Class IV futures were higher but not as strong as Class III. Strength stemmed from a higher nonfat dry milk price. The World Agricultural Supply and Demand report was bullish for corn and soybeans. With there being a relationship between corn and milk, the strong of corn likely provided some strength to milk futures. USDA reduced corn yield by 2.9 bushels per acre to 172.50 bushels per acre and reduced production to 13.944 billion bushels with ending stocks at 1.219 billion bushels which is considered tight. Soybean yield was reduced 1.4 bushels per acre to 50.5 bushels per acre. The estimate if for ending stocks at 200 million bushels which is also tight. USDA reduced milk production this year by 300 million pounds to 226.5 billion pounds which would be just 200 million pounds above 2021. Production next year was reduced 500 million pounds to an estimate of 228.8 billion pounds.
AVERAGE CLASS III PRICES
| 3 Month: | $21.20 |
| 6 Month: | $21.41 |
| 9 Month: | $21.27 |
| 12 Month: | $21.14 |
CHEESE
Both block and barrel cheese prices moved to the highest level they have been since July 27th. There seems to be more momentum building under the market. However, with cheese inventory at a high level, upside may be limited. USDA kept their estimate for cheese prices unchanged this year at $2.0750 and reduced next year's average to $1.97. Dry whey price was left unchanged this year at 61 cents per pound and left unchanged next year at 48.50 cents per pound.
BUTTER
USDA left butter increased butter price 6.50 cents from their August estimate to an average of $2.85 and increased the 2023 estimate a penny to $2.3850. Nonfat dry milk price was raised 3.50 cents to an average of $1.69 and raised 5.50 cents to an average of $1.5050 for 2023. Darigold broke ground on a new facility in Pasco, Washington that will produce 175 million pounds of butter and 280 million pounds of powdered milk annually once it is up and running in early 2024.
OUTSIDE MARKETS SUMMARY
September corn gained 13.75 cents closing at $7.1225. September soybeans jumped 60.50 cents closing at $15.4975 with September soybean meal up $32.00 per ton closing at $472.90. September wheat declined 12 cents ending at $8.4125. October live cattle gained $0.07 ending at $145.75. October crude oil gained $0.99 ending at $87.78 per barrel. The DOW gained 230 points closing at 32,381 while the NASDAQ gained 154 closing at 12,266.
