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.
