MILK
Class III futures gains earlier in the day faded even though barrel cheese and dry whey prices increased. The substantial pressure on butter price indicates there may be limited upside potential for prices through the end of the year. Butter was the strong category of the spot market providing hope for higher milk prices as it would provide some support to the rest of the complex. That has changed. It will be difficult for milk futures to show much upside potential, as underlying price increases will be short-lived. That has been the pattern for a while and will continue to be the pattern for a while. Milk production is not going to slow down anytime soon. Milk production per cow continues to improve and is expected to continue to do so over the next few months. USDA has not released the Agricultural Prices for the month of August. They were having difficulties during the day reporting daily prices for livestock due to some problems with their reporting system. This will leave us to report that information as we receive it Tuesday.
AVERAGE CLASS III PRICES
| 3 Month: | $20.43 |
| 6 Month: | $19.80 |
| 9 Month: | $19.76 |
| 12 Month: | $19.76 |
CHEESE
Cheese prices have been declining but at a steady downward trend and not what took place in butter Monday. Buyers have become less aggressive on the spot market, as they may now have purchased sufficient supply for the early needs of the market for the holidays. Cheese supply is readily available out in the country, reducing the need to come to the spot market to obtain supply. The market may not continue to decline but may have limited upside, which would keep traders bearish.
BUTTER
The butter market may be reflecting what is taking place. Consumers have been purchasing butter ahead on recommendation of various publications due to the potential for a butter shortage. Now that hype may be satisfied along with buyers having filled a lot of orders that have already been place earlier than usual, leaving a demand void. Price fell back to the lowest level it has been since Aug. 19. The decline Monday was the largest one-day price decline since Jan. 26. Butter futures indicated that butter price would decline as time moved on. Now it is taking place and maybe will fall further than anticipated, depending on ongoing demand.
OUTSIDE MARKETS SUMMARY
December corn gained 10.75 cents, closing at $6.9150. November soybeans gained 19.25 cents, closing at $14.07 with December soybean meal up $2.70 per ton closing at $428.10. December wheat jumped 53 cents, ending at $8.8225. December live cattle declined $0.52, closing at $152.47. December crude oil declined by 1.37, closing at $86.53 per barrel. The Dow declined 129 points, closing at 32,733, while the Nasdaq declined 114 points, closing at 10,988.
