MILK
Milk futures took a hit today as weakness in block cheese and butter developed. It is uncertain whether prices have reached a resistance level and will slow demand or whether buyers are satisfied for the time being. One thing we do know is that milk production is increasing again. Cooler weather may increase that level of gain as strong gains were seen even though there was hot weather this summer. Milk production is termed as steady recently which may indicate stability before production begins to trend higher. It is uncertain what the impact of the Fed raising interest rates will have on overall demand The rate increase of 75 basis points moves interest rates to the highest level since 2008. That may result in higher prices at the grocery store which may require consumers to tighten their belts a little more. Consumers will take the necessary steps to bring their costs under control. The October Class I price was announced at $22.71, down $0.91 from September.
AVERAGE CLASS III PRICES
| 3 Month: | $20.10 |
| 6 Month: | $21.05 |
| 9 Month: | $20.93 |
| 12 Month: | $20.85 |
CHEESE
Demand has shown some recent strength which has prompted some cheese manufacturers to cut back on orders to keep up. This is not widespread as inventory remains high. The recent demand seems to be focused on fresh cheese which has prompted buyers to be more aggressive. However, many are able to obtain the cheese they need in the country without having to be aggressive on the daily spot market. Yet the overall trend is higher. USDA will release the August Cold Storage report tomorrow, which is expected to show an increase in inventory, but the increase may be less than usual for this time of year.
BUTTER
Price has backed off significantly since reaching a record high. The state of the economy may have an impact on the level of demand through the rest of the year. Buyers have been preparing for strong seasonal demand which may put them in a better position of ownership through the rest of the year. Supply is not plentiful but sufficient. Slower demand may keep a sufficient supply available to the market.
OUTSIDE MARKETS SUMMARY
December corn declined 6.50 cents closing at $6.8550. November soybeans fell 17.50 cents closing at $14.6125 with October soybean meal up $3.90 closing at $454.70 per ton. December wheat gained 10 cents closing at $9.0375. November crude oil declined $1.00 closing at $82.94 per barrel. The DOW fell 522 points closing at 30,184 while the NASDAQ fell 205 points closing at 11,220.
