Thursday Closing Dairy Market Update - Class III Futures Post a Nice Close

MILK

The October Class III milk contract closed at the highest level since May 15 ending at $19.10. All contracts closed higher as steady cheese and higher dry whey showed no reason for traders to be bearish. Milk output will slow again in many regions as hot weather is again in the forecast for the weekend. Spot milk prices are as much as $2 over class as the milk supply has tightened. There are virtually no offers being made to manufacturing plants as more are moving to bottling for school accounts and milk production has been decreasing. There is no fear of a shortage, but there is a potential for higher prices.

USDA released the July Agricultural Prices report which showed a decrease in all the categories used for calculating income over feed for the Dairy Margin Coverage program. The average corn price for July was $6.22 per bushel, down $0.27 from June. The average price for July 2022 was $7.25 per bushel. The premium/supreme hay price in July was $288 per ton, down $22 per ton from June. A year ago, the average price was $335 per ton. The all-milk price for July was $17.40, down $0.50 from June. This compares to an all-milk price for July 2022 at $25.50.

The average soybean meal price has not been released by the FSA and will likely be released tomorrow morning, allowing the calculation of income over feed for the Dairy Margin Coverage program. Another price to make note of is the average price of soybeans in July was $14.70, up $0.50 per bushel from June and down from $15.50 a year ago. The alfalfa hay price was $244 per ton, down $19 from June and down $34 per ton from June 2022.

AVERAGE CLASS III PRICES

3 Month:	$18.92
6 Month:	$18.73
9 Month:	$18.64
12 Month:	$18.62

CHEESE

Some varieties of cheese are showing good demand. Plants are running steady cheese production even though the milk supply has decreased over the past weeks. Cheese inventory has been lower than the previous year in all but one month. It is expected to remain below a year ago for the remainder of the year.

BUTTER

Butter churning has increased as more cream becomes available as greater volumes of milk are being bottled for school accounts. This leaves more cream available for manufacturing. Demand for butter is steady with some indications it is beginning to increase. Buyers are not concerned about tight supply and are increasing ownership as they can without having to chase after the market.

OUTSIDE MARKETS SUMMARY

December corn closed down 2.50 cents per bushel at $4.7825, November soybeans closed down 18 cents at $13.6875 and December soybean meal closed down $6.20 per ton at $404. December Chicago wheat closed down 5 cents at $6.0200. October live cattle closed up $0.78 at $180.83. October crude oil is up $1.95 per barrel at $83.58. The Dow Jones Industrial Average is down 168 points at 34,722 with the NASDAQ up 16 points at 14,035.

Thursday Midday Dairy Market Summary - Cheese Prices Hold

OUTSIDE MARKETS SUMMARY:

CORN:	1 Higher
SOYBEANS:	9 Lower
SOYBEAN MEAL:	$4.20 Lower
LIVE CATTLE:	$0.92 Higher
DOW JONES:	64 Points Lower
NASDAQ:	6 Points Higher
CRUDE OIL:	$0.74 Higher

MIDDAY MARKET UPDATE:

Both blocks and barrels remained unchanged at $1.9925 and $1.86 respectively with no loads traded. This is the second consecutive day of no change in prices and no trades. No buyers or sellers showed up to do business with no bids or offers remaining at the close. Dry whey price increased 2 cents closing at 30.50 cents with one load traded. The increase in dry whey provided the necessary support to keep Class III futures higher in all contracts except September, which is 3 cents lower. All other contracts are 3 cents to 14 cents higher. Butter price gained 2.50 cents closing at $2.6450 with 14 loads traded. Grade A nonfat dry milk declined 2 cents closing at $1.0725 with 4 loads traded. Class IV futures have not traded but will be lower for the day. Butter futures are 0.62 cent lower to 3.15 cents higher. Dry whey futures are steady at $1.85 cents higher. USDA will release the July Agricultural Prices report this afternoon.

Fluid Milk and Cream - Western U.S. Report 35

In California, improvements to cow comfort are minimal, as temperature drops were small.     Milk production is lower and milk volumes are tighter. Handlers suggest preliminary 2023     August production volumes are below August 2022 production volumes. Some open processing     capacity is available. However, partly due to some planned maintenance power outages     recently the Central Valley is comparatively tighter with open processing capacity. Handlers     relayed some balancing plants are not currently operating. Class I and III milk demand is     strong. Class II and IV milk demand is steady. According to the California Department of     Water Resources, as of August 10, 2023, the state had received 8.52 inches of water above     the historical average. Handlers relay that farmers are still in good shape with available     water for irrigation. 

Arizona temperatures stayed in the triple digits arena this week, heating up to nearly the 120s on the hottest day. Milk output on the farm is lower as the heat is impacting cow comfort. Milk volumes are tight, and some open processing capacity is available. Spot load sales and purchases are reported at above Class prices. Class III has picked up stronger demand along with Class I. Demand for other Classes is unchanged.

Although temperatures in New Mexico started in the 80s this week, they climbed back to     finish the later part of the week in the 90s. Handlers indicate milk production is trending     lower, but supplies are in decent shape compared to processing needs. Class I demand is     stronger with educational facilities in session. Class III demand is strong. Demand for the     remaining Classes is steady. 

Handlers in the Pacific Northwest report farm level milk output has been trending down in recent weeks, partly due to heat impacts on cow comfort. Manufacturers indicate milk volumes are meeting most processing needs. However, fat components from milk volumes are tighter. Milk Class demands are unchanged. 

Milk production in the mountain states of Idaho, Utah, and Colorado is lower. Handlers indicate seasonal week to week decreases have become flatter. However, some handlers also indicate fat components of milk volumes have dropped to lower seasonal levels. Although some open capacity is reported, processors indicate milk volumes are in good balance with     manufacturing needs. Class I and III milk demand is strong, while demand for remaining     Classes is steady. 

Lower milk production at the farm level and contracted buyers ordering at the higher amounts is making condensed skim milk available for spot purchasing tight. Demand is steady. Although heavier Class I processing has increased available cream volumes, cream is still on the tight end overall for spot purchasers looking for loads. Cream demand is steady. Higher end cream multiples moved slightly lower this week.



     Western U.S., F.O.B. Cream
     Price Range - All Classes; $/LB Butterfat:   3.2154 - 3.7288
     Multiples Range - All Classes:               1.1900 - 1.3800
     Price Range - Class II; $/LB Butterfat:      3.4315 - 3.7288
     Multiples Range - Class II:                  1.2700 - 1.3800

Thursday Morning Dairy Market Update - Steady Cash Prices May Provide Early Support

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 2 Lower
Soybean Futures:	2 to 4 Lower
Soybean Meal Futures:	$3 to $4 Lower
Wheat Futures:	5 to 8 Lower

MILK:

Class III futures garnered mixed prices Wednesday as traders found no direction from underlying cash. The pattern has been that futures have moved higher into spot trading and then adjusted accordingly. That may be the case again Thursday. There is a sense that steady underlying cash prices indicate the market has support. Upside price potential may be limited but it is uncertain as to what that limitation might be. Time of year would suggest further gains are possible as buyers look ahead and prepare for upcoming demand. Milk production is termed as steady, but hot weather again will return in many areas, which will impact cow comfort and milk output. USDA will release the July Agricultural Prices report Thursday afternoon, which will provide prices for corn, supreme/premium hay, and the All-milk price used in the calculation of income over feed for the Dairy Margin Coverage program. The soybean meal price is not on the report and is released by the FSA generally the following day.

CHEESE:

Increased demand for pizza is improving demand for those cheeses. Some cheese plants indicate they may not be able to supply sufficient cheese to meet the strong increase in demand for mozzarella and other pizza cheeses. The demand will be met but buyers may need to look for other avenues to purchase what they need.

BUTTER:

Price has been unable to trend higher as there is sufficient supply available for demand and then some. Buyers can purchase without having to chase the market. Sellers continue to offer significant volume on the spot market, leaving traders unconcerned over supply. Price may remain choppy for a time. 

Wednesday Closing Dairy Market Update - August Class III Price is $17.19

MILK

Class III milk futures did come back a bit from the pressure that came into futures after spot cheese, butter and dry whey remained steady. A mixed close to milk futures was positive as traders might have decided steady prices may not be bearish after all. Milk production is termed as mixed this week. Cooler weather has improved cow comfort but a rebound to previous levels may be difficult to realize. Hot weather will return later this week and remain for a period impacting milk output again. Class IV futures took a hit as traders reacted to the weakness of nonfat dry milk. Class III futures are above Class IV futures from September through February contracts. This has been a rarity over the past two years. USDA announced the August Federal Orde class prices today. The Class II price was $19.91, up $0.79 from July and $7.00 below August 2022. The Class III price was $17.19. up $3.42 from July but down $2.20 from a year ago. The Class IV price was $18.91, up $0.65 from July but down $5.90 from August 2022.

AVERAGE CLASS III PRICES

3 Month:	$18.79
6 Month:	$18.61
9 Month:	$16.54
12 Month:	$16.53

CHEESE

Manufacturing plants do not have much extra milk to choose from as reduced milk production leaves a limited amount available on the spot market. What is available is commanding a premium over class. Pizza demand has increased due to schools reopening and the beginning of the football season. Cheese demand for pizzas is strong with some indicating they may struggle to meet the needs in the short term. This may provide further support as cheese prices may slowly improve.

BUTTER

Cream supply has increased recently with some plants indicating they have seen steady production throughout the summer. Inventories have remained higher than a year ago so far with the potential to remain above a year ago through the rest of the year. Current demand is termed as steady.

OUTSIDE MARKETS SUMMARY

December corn closed down 6.00 cents per bushel at $4.8075, November soybeans closed down 5.75 cents at $13.8675 and December soybean meal closed down $1.70 per ton at $410.20. December Chicago wheat closed up 6.50 cents at $6.0700. October live cattle closed down $1.43 at $180.05. October crude oil is up $0.47 per barrel at $81.63. The Dow Jones Industrial Average is up 38 points at 34,890 with the NASDAQ up 756 points at 14,019.

Wednesday Midday Dairy Market Summary - Spot Prices Hold

OUTSIDE MARKETS SUMMARY:

CORN:	5 Lower
SOYBEANS:	12 Lower
SOYBEAN MEAL:	$0.20 Lower
LIVE CATTLE:	$1.82 Lower
DOW JONES:	59 Points Higher
NASDAQ:	88 Points Higher
CRUDE OIL:	$0.39 Higher

MIDDAY MARKET UPDATE:

Both block and barrel cheese prices remained unchanged at $1.9925 and $1.86 respectively with no loads traded. There was one unfilled bid remaining at the close for a load of barrels. Dry whey price remained unchanged at 28.50 cents with 4 loads traded. The pattern again was that Class III milk futures were higher before spot trading and steady cash prices caused traders to liquidate positions putting pressure on futures. Class III futures are 2 to 20 cents lower with September showing the greatest loss. Butter price remained unchanged at $2.62 with no load traded. No buyers or sellers showed up to the market to do business. Grade A nonfat dry milk price declined a penny closing at $1.0925 with no loads traded. Class IV futures are unchanged to 10 cents lower. Butter futures are 2.72 cents lower to 0.02 cents higher. Dry whey futures have not yet traded today. USDA will announce the August Federal Order prices today.

Wednesday Morning Dairy Market Update - Cheese May Show Further Strength

OPENING CALLS:

Class III Milk Futures:	4 to 8 Higher
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	3 to 5 Higher
Soybean Futures:	4 to 6 Higher
Soybean Meal Futures:	$2 to $3 Higher
Wheat Futures:	5 to 7 Higher

MILK:

Class III milk futures might see some strength prior to spot trading Wednesday. The action of spot cheese prices Tuesday suggests further buyer interest will be evident Wednesday. Higher underlying cash would push milk futures higher. The September contract is now the front-month as August ended trading Tuesday. USDA will announce the Federal Order class prices Wednesday. The trade anticipates a Class III price of $17.18 and a Class IV price of $18.91. This would compare to the July Class III price of $13.77 and a Class price of $18.26. This will be a vast improvement for Class III but still lower than desired. Class IV futures may struggle Wednesday as butter is having difficulty finding support.

CHEESE:

Overall, cheese is expected to remain choppy but with a bias to the upside. Buyers may be more aggressive now that cheese production is slowing, and they look ahead to upcoming demand though the end of the year. There seems to be more upside price potential than downside potential. Buyers may not want to take a chance on cheese prices remaining here or at lower prices through the end of the year. They may be more aggressive to improve ownership of supply.

BUTTER:

Buyers have no concern over butter supply. There is sufficient supply to meet demand in the country through regular channels as well as sellers offering more on the daily spot market. Buyers are willing to purchase what is being offered without difficulty. This increases supply for later in the year which may limit upside price potential.

Tuesday Closing Dairy Market Update - September Milk Closes Above $19

MILK

Class III futures received buying interest in response to higher spot cheese prices. Stable prices yesterday resulted in some pressure but that was reversed and then some today as buying was triggered is response to the strength. September Class III is partially priced by the trade and did show quite the response as October and November but was able to move and close above $19. The hope is that underlying cash prices will remain supported so this will come to fruition. The October contract did move above $19 briefly today but could not hold above that level. The current fundamental outlook would suggest prices should improve over the next month or so but demand will need to support a trend higher. Milk production is running below a year ago and is expected to continue to do so possibly through the end of the year. USDA will release the August Federal Order class prices tomorrow. The trade anticipates a Class III price of $17.18 and a Class IV price of $18.91. This would compare to the July Class III price of $13.77 and a Class IV price of $18.26.

AVERAGE CLASS III PRICES

3 Month:	$18.84
6 Month:	$18.63
9 Month:	$18.55
12 Month:	$18.53

CHEESE

Block cheese price is poised to move back above $2, which could bring more buyers back into the market more aggressively again. Likely, the price might trade sideways on both sides of that price for a time. There does not seem to be enough concern over supply to warrant very aggressive buying in the near term. Spot milk is not very abundant with manufacturing plants relying mostly on contracted milk or on patron milk for processing.

BUTTER

The weakness of butter has been a bit of a surprise as steady demand is utilizing production and requiring some inventory to meet that demand. Inventory is decreasing seasonally but remains higher than a year earlier. Export demand is slower than a year ago, allowing for more to be available to supply domestic demand. Churning remains active with cream supply a bit more available at the present time.

OUTSIDE MARKETS SUMMARY

December corn closed down 9.50 cents per bushel at $4.8675, November soybeans closed down 13.25 cents at $13.9250 and December soybean meal closed down $6.90 per ton at $411.90. December Chicago wheat closed down 16.50 cents at $6.0050.

October live cattle closed down $0.08 at $181.48. October crude oil is up $1.06 per barrel at $81.16. The Dow Jones Industrial Average is up 293 points at 34,853 with the NASDAQ is up 239 points at 13,944.

Tuesday Midday Dairy Market Summary - Cheese Prices Show Strength

OUTSIDE MARKETS SUMMARY:

CORN:	3 Lower
SOYBEANS:	11 Lower
SOYBEAN MEAL:	$5.20 Lower
LIVE CATTLE:	$0.30 Higher
DOW JONES:	234 Points Higher
NASDAQ:	215 Points Higher
CRUDE OIL:	$1.10 Higher

MIDDAY MARKET UPDATE:

Block cheese price gained 4.75 cents closing at $1.9925 with 2 loads traded. Barrel cheese price gained 6 cents closing at $1.86 with no loads traded. There were two unfilled bids for barrels with no bids for blocks and no uncovered offers in either category. Dry whey price remained steady at 28.50 cents with one load traded. Class III futures are 5 cents lower to 24 cents higher. Lower prices were only seen in front-month August and the March contracts. August goes off the board today with the Federal Order prices to be announced tomorrow. Butter price declined 5 cents closing at $2.62 and the lowest price since August 4. There were 18 loads changing hands with one uncovered offer remaining at the close. Grade A nonfat dry milk price slipped 0.25 cent ending at $1.1025 with no loads traded with 2 unfilled bids and 2 uncovered offers remaining at the close. Class IV futures are 4 cents lower to 2 cents higher. Butter futures are 1 cent lower to 0.20 cent higher. Dry whey futures are steady to 0.50 cent higher. Today is the last trading day for August dairy futures and options with the August Federal Order prices announced Wednesday.

Tuesday Morning Dairy Market Update - Last Trading Day for August Contracts

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 3 Lower
Soybean Futures:	6 to 9 Lower
Soybean Meal Futures:	$3 to 5 Lower
Wheat Futures:	2 to 4 Lower

MILK:

Milk futures have little reason to move much or trend higher at the present time. The underlying cash is somewhat stable with business being done as needed. Buyers of cheese and butter are not concerned over supply, which leaves them taking care of business without having to be aggressive. Milk production is running below a year ago and is expected to remain that way, potentially for the rest of the year. There are some concerns that current underlying cash prices will not hold through the rest of the year without the support of dry whey and nonfat dry milk. USDA has not been very optimistic with their estimates of milk and product prices for next year. Milk production will respond to higher milk prices, but the current milk prices and futures prices throughout next year leave much to be desired and not good enough to encourage expansion. Tuesday is the last trading day for August futures and options with the Federal Order prices announced Wednesday.

CHEESE:

Buyers and sellers are taking care of business in the country, leaving little need to come to the spot market to buy or sell. This leaves the market steady. Blocks may move back above the $2.00 level but are unlikely to develop a strong uptrend unless demand improves both domestically and internationally.

BUTTER:

Price may have a difficult time moving much higher as inventory is higher than a year ago and production is ongoing. More cream has recently become available as milk is being standardized for school systems. There is no concern over supply, leaving buyers purchasing as they need rather than purchasing aggressively to increase ownership for later demand. 

Monday Closing Dairy Market Update - Traders Wait for Price Direction

MILK

Milk future slipped back as traders were a bit disappointed over spot prices not being able to move higher. For traders to turn bullish, they will need to see underlying cash prices continue to show advances even if they are only minor ones. Tomorrow is the last trading day for August futures and options with the August Federal Order class prices announced on Wednesday. The August Class III price will be much better than the July but still leave much to be desired. Heavier culling is expected to continue as farms will reduce cow numbers to generate income from strong cull cow prices and to reduce feed costs. The bar is raised on per cow milk production as the animals need to pay their way. Current milk prices are not conducive for dairy farmers to increase cow numbers or expand at the present time or in the near future.

AVERAGE CLASS III PRICES

3 Month:	$18.24
6 Month:	$18.25
9 Month:	$18.26
12 Month:	$18.30

CHEESE

Traders were waiting for cheese prices to move but they were disappointed as prices remained unchanged. This also keeps them guessing as to market direction which has resulted in weakness today. A case can be made either way for market movement. The time of year would favor the support of higher prices moving forward, but current milk production is sufficient for bottling and manufacturing. It is running below year-earlier levels. Exports are below a year ago but are expected to improve as the year progresses.

BUTTER

Butter may be a bit more bearish than cheese at this point, but the price is higher. Churning is slower than it has been, but cream supply is improved as more cream is available as milk is standardized for the school system. Inventory is higher than a year ago which may limit upside price potential.

OUTSIDE MARKETS SUMMARY

December corn closed up 8.25 cents per bushel at $4.9625, November soybeans closed up 18 cents at $14.0575 and December soybean meal closed up $3.80 per ton at $418.80. December Chicago wheat closed down 4.75 cents at $6.1700.

October live cattle closed up $0.38 at $181.55. October crude oil is up .14 per barrel at $79.97. The Dow Jones Industrial Average is up 213 points at 34,560 with the NASDAQ is up 114 points at 13,705.

Monday Midday Dairy Market Summary - Spot Prices Hold

OUTSIDE MARKETS SUMMARY:

CORN:	7 Higher
SOYBEANS:	11 Higher
SOYBEAN MEAL:	$0.60 Higher
LIVE CATTLE:	$0.65 Higher
DOW JONES:	228 Points Higher
NASDAQ:	114 Points Higher
CRUDE OIL:	$0.19 Higher

MIDDAY MARKET UPDATE:

Both blocks and barrels remained unchanged at $1.9450 and $1.80 respectively. There were no loads traded in either category with one unfilled bid remaining for a load of barrels and the same as Friday. Dry whey showed some strength with a gain of 0.50 cent closing at 28.50 cents with one load traded. Class III futures were higher prior to spot trading but fell into negative territory as traders were disappointed over the inability of cheese prices to show gains. Underlying cash prices may have reached a plateau and may also be building support. Class III futures are 12 cents lower to 16 cents higher. Butter price remained unchanged at $2.67 with no loads traded. Grade A nonfat dry milk price remained unchanged at $1.1050 with 4 loads traded. Class IV futures are 8 cents higher in October and the only contract traded so far. Butter futures are 1.70 cents lower to 0.47 cent higher. Dry whey futures are unchanged at 0.60 cent higher.

Class III milk price forecast raised

The U.S. Department of Agriculture lowered its 2023 and 2024 milk production forecasts in the latest World Agricultural Supply and Demand Estimate report, stating, “The cow inventory is lowered for both years based on the July 1 dairy cow inventory and heifer retention data provided in the recent cattle report as well as the average cow inventory data in the latest milk production report. Output per cow was reduced for 2023 but unchanged for 2024.”
2023 production and marketings were estimated at 227.9 and 226.9 billion pounds, respectively, down 500 million pounds on both from a month ago. If realized, production would be up 1.4 billion pounds, or 0.6%, from 2022.

2024 production and marketings were projected at 230.5 and 229.5 billion pounds, respectively, down 100 million pounds on both. If realized, 2024 production and marketings would be up 2.6 billion pounds, or 1.1%, from 2023.

The Class III milk price forecast was raised as expected with higher cheese prices more than offsetting lower whey. The 2023 average was projected at $16.90 per hundredweight, up 85 cents from last month’s estimate, and compares to $21.96 in 2022 and $17.08 in 2021. The 2024 average was projected at $16.55, up 60 cents from last month’s estimate.

The 2023 Class IV price forecast was raised due to higher butter and nonfat dry milk prices. The 2023 average was projected at $18.50, up 30 cents from a month ago, and compares to $24.47 in 2022 and $16.09 in 2021. The 2024 Class IV is expected to average $17.80, up 35 cents from last month’s estimate.

The 2023 cheese price is expected to average $1.7750 per pound, up a dime from last month’s estimate and compares to $2.1122 in 2022 and $1.6755 in 2021. The 2024 average was estimated at $1.7550, up 6.50 cents.

Butter is expected to average $2.4950 in 2023, up 6 cents from last month’s estimate, and compares to $2.8665 in 2022 and $1.7325 in 2021. The 2024 average was pegged at $2.43, up 8.50 cents from a month ago.

Nonfat dry milk is expected to average $1.1750 per pound in 2023, down from $1.6851 in 2022 and $1.2693 in 2021 and will fall to a $1.1250 average in 2024.

Dry whey’s 2023 average was projected at 32.50 cents per pound, down from 60.57 cents in 2022 and 57.44 cents in 2021. The 2024 average was projected at 30.50 cents per pound.
The U.S. corn outlook is for reduced supplies, lower domestic use, smaller exports and tighter ending stocks. Projected beginning stocks were raised 55 million bushels. Corn production was forecast at 15.1 billion bushels, up 10% from 2022 but down 209 million from the July projection and, if realized, would be the second highest on record behind 2016-17.

The season’s first survey-based corn yield forecast, at 175.1 bushels per acre, is up 1.8 bushels from last year but 2.4 bushels lower than last month’s projection. Area harvested, forecast at 86.3 million acres, was unchanged from June but up 9% from a year ago. U.S. corn use was reduced 95 million bushels to 14.4 billion. Exports were cut 50 million bushels to 2.1 billion. Ending stocks were lowered 60 million bushels to 2.2 billion. The season-average corn price was raised 10 cents to $4.90 per bushel.

Higher beginning stocks and lower production and exports was the story on soybeans. Beginning stocks were raised on higher imports. Soybean production was forecast at 4.2 billion bushels, down 2%, or 95 million, on lower yields. Harvested area was forecast at 82.7 million acres, unchanged from July but down 4% from 2022. The survey-based soybean yield forecast of 50.9 bushels per acre is up 1.4 bushels from 2022 but down 1.1 bushels from last month. Soybean supplies are projected at 4.5 billion bushels, down 2% from last year.

Soybean exports are down 25 million bushels, and ending stocks were forecast at 245 million bushels, down 55 million from last month. The season-average soybean price was forecast at $12.70 per bushel, up 30 cents from last month. Soybean meal was forecast at $380 per short ton, up $5.

The latest Crop Progress report showed 65% of U.S. corn was in the dough stage, as of the week ending Aug. 13, 5% ahead of a year ago. 59% was rated good to excellent, up 2% from the previous week and down 2% from a year ago.

The report shows 78% of the soybeans were setting pods, up from 66% the previous week, 6% ahead of a year ago and 3% ahead of the average. 59% were rated good to excellent, up 5% from the previous week and 1% ahead of a year ago.

The week ending Aug. 5 saw 60,500 dairy cows go to slaughter, up 400 head from the previous week and 3,100, or 5.4%, more than a year ago. Year-to-date, 1,912,300 have been culled, up 104,400 head, or 5.8%, from a year ago. Dairy cows surpassed beef cow volume for the first time since April.

StoneX said Aug. 14 that the high culling rate is due to “the impact of margins versus what beef prices offer dairy farmers. We are hearing reports of more farms closing their doors, and a $70 per cwt premium in cull cow prices is no doubt an impact on that decision. Total cattle slaughter in the U.S. continues to be weak with a contracted herd, meaning that dairy cows are a driving factor in lean beef production.”

Meanwhile, the latest Margin Watch from Chicago-based Commodity and Ingredient Hedging LLC said, “Dairy margins traded on either side of unchanged in the first half of August as the complex benefited from a fall in corn and soybean meal futures. Spot milk prices have increased and in the Upper Midwest marked their highest level since October 2020. Weekly milk cow slaughter continues to track at or near 10-year highs, about 7% ahead of year-ago levels.”

The MW reported highlights from the WASDE’s milk production, cow numbers and export data and warned, “High butter prices continue to keep U.S. product off the world market while cheese exports rebounded compared to May. Mexico’s demand for milk powders has held steady. Through the first half of the year, total dairy export volume is 5% lower. Internationally, GDT demand appears to be waning for the largest importer of dairy products is reducing demand as China faces its own flurry of economic uncertainty. This product must find a home elsewhere and will continue to serve as a headwind to dairy product pricing.”

Recent rainfall and lack of exports have taken risk premium out of the feed market after a spike early last month, the MW said. The focus is “monitor forward opportunities to add margin coverage with flexible price strategies and look to higher delta positions to secure feed needs throughout this crop year.”

CME block cheese topped $2 per pound Tuesday and closed Friday at $2.0275, up 3.75 cents on the week, as summer heat takes a toll on milk output and schools gear up to reopen. It was the seventh consecutive week of gain totaling 69.25 cents, highest CME price since March 28 and 20.75 cents above a year ago as traders awaited Monday’s July milk production report.

The barrels climbed to $1.85 per pound Tuesday, then dropped 8.50 cents Thursday, but closed Friday at $1.8075, 1.75 cents lower on the week, 8.75 cents below a year ago and 22 cents below the blocks. There were four cars of each sold on the week.

Milk offers and trading have dwindled, said Dairy Market News. Cheesemakers are running regular schedules on internally sourced milk or spot milk priced at or just above Class III. Cheese demand is generally steady, but cheese availability varies, and contacts say it is on “the snugger side.”

Cheese demand remains steady in the West but favoring blocks. Export demand is on the light end, most of it coming from south of the border. Sentiment is that the lighter export demand is moving more barrel cheese to the CME. Milk and cream volumes are tighter in the West, but cheesemakers have enough milk to run steady production which is keeping ahead of demand for most, DMN said.

CME butter climbed to $2.77 per pound Thursday, highest since Dec. 16, 2022, but closed Friday at $2.70, up a penny on the week, but 24 cents below a year ago, with 98 sales. Wednesday saw 49 loads exchange hands, biggest single-day volume since Nov. 3, 2004, when butter was only trading three times a week.

Central butter producers say cream is hard to find and some are taking loads from Western states. Butter supplies are, and have been, somewhat snug, and producers and traders say availability has been on a downward trajectory. School district and seasonal retail ordering upticks have drained the butter supply.

Grade A nonfat dry milk sunk to $1.0850 per pound Wednesday, lowest since July 12, but closed at $1.1050, down a half-cent on the week and 41.50 cents below a year ago. There were 12 loads traded on the week.

Dry whey closed at 27 cents per pound, unchanged on the week but 18 cents below a year ago, with 16 sales put on the board at the CME.

Looking at dairy demand, the USDA reports that June cheese consumption was down 2% from June 2022, primarily due to exports being down 19%.

Butter disappearance, on the other hand, was up 20.1% from a year ago, thanks to domestic use being up 27.3%, fifth month in a row, according to HighGround Dairy. Butter exports were down 60.5% and less than half of those a year ago.

Nonfat-skim milk powder usage was down 4% from a year ago, with domestic use down 14.6%, first time since January, according to HGD, while exports were up 2%, thanks to big shipments to Mexico. HGD said, “Usually, domestic NFDM usage increases from May to June, so the 1.2% month-over-month loss was counter to the five-year mean of plus 84.9%, likely due to manufacturers making big powder sales in June.”

Dry whey disappearance fell for the second time in 2023, driven by abysmal export sales, said HGD, down nearly 34% from June 2022. Domestic use however was up 28.4%.

Abundant powder offerings in Tuesday’s Global Dairy Trade auction resulted in the biggest drop in the weighted average since May 3, 2022. Down 7.4%, the drop follows a 4.3% decline Aug. 1, a 1% decline July 18 and a 3.3% decline July 4. Traders brought 74 million pounds of product to market, up from 71.9 million Aug. 1, and the most since Nov. 17, 2020. The average metric ton price fell to $2,875, down from $3,100 Aug. 1.

Whole milk powder plunged 10.9%, following an 8% drop Aug. 1. Skim milk powder was down 5.2%, after a 1.4% decline. Anhydrous milkfat was down 5.3%, after a 0.5% slip, and GDT butter was down 3%, following a 0.7% loss Aug. 1. GDT cheddar saw the only gain, up 5.8%, after falling 1.4% last time.

StoneX said the GDT 80% butterfat butter price equates to $2.0086 per pound, down 6.2 cents from the Aug. 1 event, and compares to CME butter which closed Friday at $2.70. GDT cheddar, at $1.8721, was up 9.9 cents, and compares to Friday’s CME block cheddar at a pricy $2.0275. GDT skim milk powder averaged $1.0583 per pound, down from $1.1130 (5.5 cents), and whole milk powder averaged $1.1558 per pound, down from $1.2993 (14.4 cents). CME Grade A nonfat dry milk closed Friday at $1.1050 per pound.

Analyst Dustin Winston said market share of North Asia, which includes China, was “back to being the largest purchaser. North Asia recovered this standing in the last auction. Southeast Asia volume once again fell from both last year and the last event. Total WMP sales this year are close to year-ago levels, but North Asia has taken a larger percentage this year indicating poor demand in SE Asia.”

The Aug. 15 Daily Dairy Report said, “Strong increases in Chinese milk production boosted the supply of fresh milk in China and reduced the need for imported milk powders. There were also signs of faltering overall milk powder consumption. Last week, the South China Morning Post reported that Chinese women may give birth to fewer than 8 million babies this year, down from 9.56 million last year and 40% fewer than in 2018.”

Speaking in the Aug. 21 Dairy Radio Now broadcast, StoneX broker Dave Kurzawski blamed sluggish purchases from China for the GDT’s downfall on powder, although its purchases were up a bit. He focused on the differences between the global cheese market and the U.S. market, and said a lot of cheese is being made and consumed on U.S. soil right now, so the loss of exports is not as big a factor. CME fresh cheddar is tight, he explained, and that’s what sets the price for 80%-85% of U.S. cheese. Production hick-ups, both at the farm and processor level, high cull rates, falling milk output and schools reopening resulted in almost a 70-cent rally on the blocks in seven weeks, he said.

Fonterra Cooperative reduced its 2023-24 season forecast farmgate milk price range Thursday from $6.25-$7.75 per kilograms of milk solids with a midpoint of $7 down to $6-$7.50 per kgMS with a midpoint of $6.75. Fonterra CEO Miles Hurrell said GDT prices have continued to fall since the co-op revised its milk price earlier this month, requiring the further reduction.

Back home, the Federal Milk Marketing Order pricing formula hearing took place Aug. 23 in Carmel, Indiana. The hearing considered and gathered evidence on proposed amendments to pricing formulas in U.S. market orders.

Cooperatives Working Together member cooperatives accepted 27 offers of export assistance this week that helped capture sales of 2.7 million pounds of American-type cheese. The product is going to customers in Asia, Middle East-North Africa and Oceania through November. CWT’s 2023 exports now total 31.1 million pounds of American-type cheeses, 809,000 pounds of butter, 24,000 pounds of anhydrous milkfat, 31.4 million pounds of whole milk powder and 5.9 million pounds of cream cheese. The products are going to 24 countries and are the equivalent of 580.8 million pounds of milk on a milkfat basis.

Monday Morning Dairy Market Update - Traders Show Optimism

OPENING CALLS:

Class III Milk Futures:	5 to 15 Higher
Class IV Milk Futures:	Steady to 5 Higher
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	3 to 5 Higher
Soybean Futures:	8 to 11 Higher
Soybean Meal Futures:	$3 to $4 Higher
Wheat Futures:	4 to 6 Lower

MILK:

It seems the market wants to move higher as traders showed buying interest again overnight. It is in the time of year buyers of cheese become more aggressive as they look ahead to demand later in the year. There has been a significant gain in underlying cash prices over the past two months, but that gain is expected to be slower moving forward as the market will balance higher prices with international prices and demand. Slowing milk production should provide some support as production is not expected to see any gains over the previous year over the next few months. Hot weather has impacted milk production to some extent, which will keep production lower than a year ago for a period. The potential for milk prices is uncertain but the low has been set for the year.

CHEESE:

Steady cheese prices Friday with only an unfilled bid for a load of barrels does not provide any indication as to price direction Monday. Block price fell below $2.00 last week but has a strong chance of moving back above that level again this week. Buyers may be a bit more aggressive now that less milk is moving to manufacturing.

BUTTER:

Price is expected to remain choppy. Trading activity on the daily spot market has increased significantly over the past few weeks. There is no lack of product available to the market, which keeps upside limited as there is no expectation of market tightness.

Friday Closing Dairy Market Update - South Dairy Trade Shows Weakness

MILK

Class III futures were able to post gains for the week despite some of the weakness experienced during the week. It is interesting that blocks declined for the week, but futures were able to gain. Class IV futures were lower for the week due to minor pressure on butter price. South Dairy Trade reports showed mostly lower prices for dairy products moving through port in Argentina and Uruguay during a two-week period. From July 1-15, there were 5,833.34 tons of dairy production moved to 18 destinations at an average price of $4,199.69 per ton. Whole milk powder price decreased 2.6% from the previous two-week period averaging $3,834.28 or $1.74 per pound. Skim milk powder decreased 3.4% to $3,540.48 per ton or $1.61 per pound. Semi-hard cheese decreased 2.2% to $4,678.97 per ton or $2.12 per pound. Hard cheese decreased 1.9% to $6,279.67 per ton or $2.85 per pound. Butter increased 3.3% from the previous period to $4,829.15 per ton or $2.19 per pound. Uruguay had 7,739.40 tons of dairy products moving to 18 destinations at an average price of $3,728.79 per ton during the period from August 1-15. Whole milk powder price increased 1.6% from the previous period at $3,685.40 per ton or $1.67 per pound. Skim milk powder fell 11.5% to $3,421.59 per ton or $1.55 per pound. Semi-hard cheese increased 0.2% to $4,899.35 per ton or $2.22 per pound. Hard cheese decreased 0.4% to $6,558.15 per ton or $2.97 per pound. Butter decreased 1.6% to $5,158.37 per ton or $2.34 per pound.

AVERAGE CLASS III PRICES

3 Month:	$18.27
6 Month:	$18.29
9 Month:	$18.30
12 Month:	$18.33

CHEESE

For the week, blocks declined 8.25 cents with 4 loads traded. Barrels slipped 0.75 cent with 9 loads traded. Dry whey increased a penny with 11 loads traded. After the previous week showing more pressure on barrels, the opposite was true this week. It does not seem as if it is a matter of one category having more supply than the other, but more a matter of who needs to take care of business during the week. Cheese prices are not expected to see much downside in the near future. However, prices will remain choppy.

BUTTER

For the week, butter declined 3 cents with 70 loads traded. Grade A nonfat dry milk remained unchanged with 9 loads traded. It is interesting that butter plants indicate there is a bit more cream available due in part to the reducing of Class II product output as well as cream coming from processing more milk for school accounts. This has increased churning to some degree but certainly not enough to put continued pressure on butter price.

OUTSIDE MARKETS SUMMARY

December corn closed down 0.25 cent per bushel at $4.8800, November soybeans closed up 16.00 cents at $13.8775 and December soybean meal closed up $2.70 per ton at $415.00. December Chicago wheat closed down 10.00 cents at $6.2175. October live cattle closed up $0.45 at $181.18. October crude oil is up $0.97 per barrel at $80.02. The Dow Jones Industrial Average is up 237 points at 34,336 with the NASDAQ up 127 points at 13,591.

Friday Midday Dairy Market Summary -Butter Sees Selling Pressure

OUTSIDE MARKETS SUMMARY:

CORN:	1 Lower
SOYBEANS:	11 Higher
SOYBEAN MEAL:	$0.40 Higher
LIVE CATTLE:	$0.60 Higher
DOW JONES:	89 Points Lower
NASDAQ:	155 Points Higher
CRUDE OIL:	$0.61 Higher

MIDDAY MARKET UPDATE:

Both block and barrel cheese prices remained unchanged at $1.9450 and $1.80 respectively with no loads traded. There was only an unfilled bid for a load of barrels remaining at the close. Dry whey price increased 2 cents closing at 28 cents with 2 loads traded. Class III futures are 2-31 cents higher with October showing the greatest gain. Butter price declined 3.50 cents closing at $2.67 with 20 loads traded. This is the lowest price since August 9^th. Grade a nonfat dry milk offset some of the pressure from butter posting a gain of a penny closing at $1.1050 with 3 loads traded. Class IV futures have only traded in the February contract at 7 cents higher. Butter futures are 2.52 cents lower to 0.50 cent higher. Dry whey futures are steady to 0.65 cent higher.

Dairy Checkoff Publishes 2022 Annual Report

Dairy Management, Inc., the planning and management organization running the national dairy checkoff program for America’s dairy farmers and importers posted its 2022 annual report. The report provides checkoff funders and other members of the dairy community with an audited financial report and highlights from 2022 focused on strategies and programs. Those include accelerating dairy sales growth and building trust in dairy foods and dairy farming with youth and other important consumer audiences. “Farmers and importers seek transparency in their checkoff strategies, and the 2022 annual report is a great way to deliver on those expectations,” says Marilyn Hershey, a Pennsylvania farmer and DMI chair. “Our checkoff team works daily to fulfill its goal of building sales and trust in dairy, and this report offers a comprehensive overview of how that plan delivered the results.” More information on the checkoff program’s budget summary and audited financial statements are available at usdairy.com.

Friday Morning Dairy Market Update - Further Strength Ahead of Cash

OPENING CALLS:

Class III Milk Futures:	Steady to 5 Higher
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	2 to 3 Lower
Soybean Futures:	5 to 7 Higher
Soybean Meal Futures:	Steady to $1 Lower
Wheat Futures:	2 to 4 Higher

MILK:

The market is going to see gains and setbacks as the market moves forward. There may be a limit to upside potential based on the level of milk production that will be maintained and the level of demand through the end of the year. Time of year is in our favor as buyers of cheese and butter generally become more aggressive as they prepare for increased demand through the end of the year. With cheese inventory already running below a year ago, there is good potential prices should increase further than what they are. The extent of that increase will be the result of continued culling that would reduce milk output, and/or increased demand. Both of these are taking place now, but the level of each will be uncertain as the year moves forward. Follow-though strength is expected in milk futures ahead of spot trading similar to the pattern so far this week.

CHEESE:

The rebound of barrels from the low yesterday may increase buyer interest as it may indicate the lower price level has been set and those who were waiting for further weakness may now step back up to the plate. Manufacturing has decreased as more milk is moving to bottling to supply school accounts.

BUTTER:

Price seems to have reached a plateau for the time being. Price potential may be limited due to buyers already having purchased significant supply ahead of time in preparation for fourth-quarter demand. The past two weeks have had a lot of butter traded during spot trading. Churning has slowed due to tighter cream supplies.

Thursday Closing Dairy Market Update - Dairy Cattle Slaughter Higher Than a Year Ago

MILK

The gains in Class III futures today were fueled by the increase of block cheese and the rebound of barrels from the lows. Barrel price closed lower but the bounce from the low was impressive. That does not necessarily mean that price has found a bottom again and will trend higher. It could be establishing a sideways trading pattern. Dairy cattle slaughter in July totaled 244,200 head. This was a decrease of 11,500 head from June but was an increase of 14,100 head from July 2022. This was the lowest monthly slaughter since April. Recent very hot weather in the Midwest and prolonged heat in other areas of the country have taken their toll on milk output. This will be difficult for cows to rebound from, but cooler weather will allow the cows to bounce back to some degree. All schools will be open over the next week or so with school accounts requiring significant and consistent volumes of milk. This is seasonal and not unexpected but it does tighten milk supply available for manufacturing. Hopefully, demand will also improve, and milk prices will rise.

AVERAGE CLASS III PRICES

3 Month:	$18.05
6 Month:	$18.12
9 Month:	$18.16
12 Month:	$18.23

CHEESE

Cheese buyers are not overly aggressive on the cash market as they have been able to pick up needed supply through regular channels. There is sufficient cheese available for demand as inventory is being used to supplement fresh supply to meet demand. Fresh cheddar cheese is what is traded on the CME daily spot market and if there is a greater demand for fresh cheese, price will rise as buyers will be more aggressive. If demand is greater for aged cheese, they will be purchasing that through other channels in the country as it is not traded on the CME.

BUTTER

Butter is available with buyers and sellers able to take care of business as needed. There have been substantial amounts of butter traded over the past two weeks on the daily spot market with demand being met. Inventory remains above a year ago with buyers already purchasing for demand later in the year. Price is expected to remain sideways for a period.

OUTSIDE MARKETS SUMMARY

December corn closed down 2.25 cents per bushel at $4.8825, November soybeans closed up 11.25 cents at $13.7175 and December soybean meal closed up $11.30 per ton at $412.30. December Chicago wheat closed down 8.00 cents at $6.3175. October live cattle closed up $2.05 at $180.73. October crude oil is up $0.16 per barrel at $79.05. The Dow Jones Industrial Average is down 374 points at 34,099 with the NASDAQ down 257 points at 13,464.

Thursday Midday Dairy Market Summary - Cheese Uncovers Buying Interest

OUTSIDE MARKETS SUMMARY:

CORN:	4 Lower
SOYBEANS:	4 Higher
SOYBEAN MEAL:	$9.00 Higher
LIVE CATTLE:	$1.40 Higher
DOW JONES:	247 Points Lower
NASDAQ:	159 Points Lower
CRUDE OIL:	$0.08 Lower

MIDDAY MARKET UPDATE:

Block cheese price increased 5.50 cents closing at $1.9450 with 3 loads traded. Price moved to $1.9475 initially but was unable to hold the gain settling back 0.25 cent from the high. Barrel closed 0.50 cent lower at $1.80 but that was bullish due to price initially declining 3.50 cents before buyers became aggressive bringing price up from the lows. Dry whey price was unchanged at 26 cents with no loads traded. Class III futures are 5 cents lower to 50 cents higher. The decrease is in August as the price adjusted from the AMS weekly prices that were released yesterday. August will end trading on Tuesday with the Federal Order prices to be announced on Wednesday. The adjustment in price is in response to the weekly prices. Butter price remained unchanged at $2.7050 with no loads traded. Grade A nonfat dry milk price remained unchanged at $1.0950 with no loads traded. Class IV futures have traded with all traded contracts at steady prices with yesterday. Butter futures are 1.27 cents lower to 1 cent higher. Dry whey futures are steady to 0.47 cent higher. USDA will release the July Livestock Slaughter report this afternoon showing the number of dairy cattle slaughtered during the month.

Fluid Milk and Cream - Western U.S. Report 34

California milk production is lower as another round of heat takes a toll on cow comfort.     Handlers suggest preliminary 2023 August production volumes are below anticipated figures,     but slightly higher compared to July 2023. Planned maintenance outages by a power company     impacted available processing time for a few Central Valley manufacturers, which brought     supplies in balance with processing capacities. This temporarily eased some tightness in     spot load availability. Class I demand is stronger with some educational institutions     starting up again. Demand for all other Classes is steady. Industry sources indicate dairy     herd dispersal sales taking place this week. According to the California Department of Water     Resources, as of August 23, 2023, the estimated total statewide reservoir storage was 30.30     million acre feet, which is 129 percent of the historical average. 

Temperatures in Arizona, receded from triple digits mid-week giving some improved cow comfort, but ended the week back in triple digits. Milk production is lower, and volumes are on the tight end. Handlers  relay spot load sales at above Class prices. Class I demand is stronger with educational facilities preparing to start the 2023-2024 school year after the upcoming holiday. Demand for all other Classes is unchanged. 

Farm level milk output in New Mexico is trending lower. Temperatures crept back to the mid-90s this week. Handlers report milk supplies are meeting manufacturing needs. Demand is steady for all Classes. 

Handlers in the Pacific Northwest report flat to slightly down milk production trends this week. Temperatures in the eastern part of the Pacific Northwest backed out of triple digits. Despite some tighter spot load availability, milk volumes are meeting most processing needs. Milk demands are unchanged. 

Although farm level milk output in the mountain states of Idaho, Utah, and Colorado is     lower, handlers report milder seasonal decreases in milk volume output recently. Some     tightness in milk volumes have eased, putting milk volumes in better balance with processing     needs. Availability of spot loads has loosened up some. Class I demand, along with Class III     demand, is stronger as 2023-2024 school year cycles have begun. Class II and IV demand is     steady. 

Condensed skim milk is tight for spot purchasing, with lower milk production and contracted buyers pulling heavily on inventories. Demand is steady. Although Class I processing increased, cream availability is on the tight end. Demand is steady. However, a  few stakeholders note slight downticks in cream demand. Cream multiples moved higher overall     for the West.

     Western U.S., F.O.B. Cream
     Price Range - All Classes; $/LB Butterfat:   3.2374 - 3.7815
     Multiples Range - All Classes:               1.1900 - 1.3900
     Price Range - Class II; $/LB Butterfat:      3.4550 - 3.7815
     Multiples Range - Class II:                  1.2700 - 1.3900

FMMO Hearing Heralds Farmer-Led Progress for Dairy

Wednesday marked the first day of a once-in-a-generation hearing on federal milk pricing. USDA’s Federal Milk Marketing Order hearing is underway as dairy producers make their case for changes to the pricing program. National Milk Producers Federation President and CEO Jim Mulhern says, “Thanks to the tireless efforts of dairy farmers and their cooperatives, this industry is poised for progress as Federal Milk Marketing Order modernization is now in sight.” The industry expects five to seven weeks of testimony and discussion on proposals to modernize the FMMO system. Following USDA’s initial presentations, the hearing will then launch into discussions of specific issues placed within the scope of the hearing. After the hearing’s conclusion, entities involved in the hearing then have a period of time to respond to the testimony, followed by a USDA draft decision, then more discussion, and ultimately a vote among dairy farmers on a final proposal, likely in the second half of 2024.

Thursday Morning Dairy Market Update - Milk Futures May Coast Until Spot Trading

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 2 Lower
Soybean Futures:	4 to 7 Higher
Soybean Meal Futures:	$4 to $6 Higher
Wheat Futures:	4 to 6 Lower

MILK:

Milk production is decreasing and below year-ago levels. Milk receipts at the plant level are decreasing, which has nearly eliminated the availability of spot milk and what is available is priced above class. Milk prices are improving but not at a pace at which farms will reduce aggressive culling or will increase cow numbers. Milk futures will respond with higher prices if underlying cash prices find support and trend higher. Hearings on the Federal Milk Marketing Order began yesterday in Carmel, Ind., with the hearings expected to last several weeks. Various proposals will be considered with testimony from farmers and others from the industry. Any vote on whatever the changes might be will not take place for at least a year.

CHEESE:

The July Cold Storage report was friendly to the market in that it showed cheese inventory below a year ago. Inventory generally builds during the first half of the year. This year, only the month of June showed inventory above the level of the previous year. Now is the time of year during which inventory declines, output slows, and demand improves. This has yet to provide continued strong support to the market.

BUTTER:

Price is expected to continue to chop around as the current price level seems to be comfortable for buyers and sellers. A sideways price range may again be developing. Inventory of butter 5% above a year ago may keep a lid on price potential.

Wednesday Closing Dairy Market Update - July Inventory Declines

MILK

Milk futures closed under pressure in response to lower cheese and nonfat dry milk. Class III futures held up well considering the 5.75 cents decline in block cheese price. Milk futures have a seasonality built into contracts with the highest prices for the year in September. It may not remain that way as there will continue to be volatility with traders reacting to underlying cash prices. The recent weakness of block cheese prices has reduced the optimism the market had been gaining recently. Milk production is decreasing seasonally as well as being impacted by hot weather. Cows will be able to rebound somewhat after the hot spell but may not come back to previous levels in the current lactation. The September Class I price was released today at $18.90. This is an increase of $2.28 from August.

AVERAGE CLASS III PRICES

3 Month:	$17.76
6 Month:	$17.90
9 Month:	$18.00
12 Month:	$18.10

CHEESE

USDA released the July Cold Storage report today which showed a decrease of inventory in all categories. American cheese inventory declined 15.3 million pounds totaling 838.2 million pounds. This is a decline of 3% from a year ago. Swiss cheese inventory declined 94,000 pounds totaling 22.5 million pounds and about steady with a year ago. Other cheese inventory totaled 627.8 million pounds, down 6.4 million pounds or 2 percent below July 2022. Total cheese inventory was 1.489 billion pounds, down 21.7 million pounds or 2% below a year ago. This should provide some support for the market as inventory running below a year ago at this time of year is not usual.

BUTTER

Butter inventory declined 18.2 million pounds totaling 331.6 million pounds. This is 5% higher than a year ago and 5% lower than June. The higher inventory will keep price subdued with limited upside. Lower world prices and reduced exports are also a factor.

OUTSIDE MARKETS SUMMARY

December corn closed up 11.00 cents per bushel at $4.9050, November soybeans closed up 14.50 cents at $13.6050 and December soybean meal closed up $6 per ton at $401. December Chicago wheat closed up 12.25 cents at $6.3975. October live cattle closed up $0.05 at $178.68. October crude oil is down $1.09 per barrel at $78.55. The Dow Jones Industrial Average is up 184 points at 34,473 with the NASDAQ up 215 points at 13,721.