MILK
The steady cheese prices yesterday and the weakness of barrels today have had a profound impact on Class III milk futures with the September and October contracts dropping nearly $0.90 per cwt. August lost about $0.45 per cwt over the past two days. This took place with only a decrease of $0.05 in the price of barrel cheese. The decline seems to have now been overdone relative to the decline of underlying cash. Milk supply has tightened due to heavier culling and the impact from hot weather. This week will impact milk output further as heat lingers a few more days. High humidity is impacting cow comfort. Butterfat content of milk is declining which may require cheese vats to be fortified to maintain cheese production. Spot milk in the Midwest is now quoted as $3.00 to as much as $5.00 under class. Still seems like a lot but much better than it had been the first half of the year.
AVERAGE CLASS III PRICES
| 3 Month: | $16.13 |
| 6 Month: | $17.18 |
| 9 Month: | $17.53 |
| 12 Month: | $17.73 |
CHEESE
The milk supply is tightening from what it has been but there is no shortage. Plants are operating on full schedules as there is sufficient milk available. However, there is a little less pressure than there had been on moving milk to find manufacturing capacity. The dumping of milk should stop as some plants are now actively looking for more milk. Demand for cheese has picked up as buyers are looking ahead to later demand.
BUTTER
Price has not been keeping up with the strength of cheese, but it has been slowly increasing as buyers turn their attention to seasonal demand. Churning is active but slowing as cream supply tightens. Foodservice and retail demand is reported as steady in recent weeks.
OUTSIDE MARKETS SUMMARY
December corn closed down 17.00 cents per bushel at $5.4825, November soybeans closed steady at $14.2000 and December soybean meal closed up $2.50 per ton at $418.60. September Chicago wheat closed down 40.25 cents at $7.2000. October live cattle closed up $0.35 at $179.95. September crude oil is down $0.85 per barrel at $78.78. The Dow Jones Industrial Average is up 82 points at 3,520 with the NASDAQ down 17 points at 14,127.
