MILK
The market giveth and the market taketh away. Sometimes it can be the other way around depending on the market movement of the day. Early strength in Class III futures quickly changed as weakness of blocks, butter, and dry whey quickly turned traders negative. Nearby futures showed some large price swings of nearly 70 cents. There had been caution over the strength milk futures might have based on underlying cash moving forward. Lower milk production than a year ago did not increase the interest of traders to become more aggressive to increase their ownership of supply. Tight spot milk supply with what is available commanding a premium to class, is not of any great concern currently. Milk supply is decreasing as was seen in the July Milk Production report. Further decreases will be seen over the next few months as farmers deal with low milk prices and high expenses. There were 11 of the top 24 states in July which showed a decrease in milk production in July. The largest decrease took place in New Mexico down 9.1%. California showed the second largest decline with a drop of 5.5%. That is significant as it is the number one milk-producing state. The largest gain was seen in South Dakota with an increase of 7.5% from a year earlier. Both Michigan and Indiana showed the next largest gain of 4.1% each. Wisconsin was up 0.9%.
AVERAGE CLASS III PRICES
| 3 Month: | $17.86 |
| 6 Month: | $17.96 |
| 9 Month: | $18.07 |
| 12 Month: | $18.16 |
CHEESE
Block cheese price came under pressure as buyers have not been interested in aggressively bidding price higher so far this week. Prices were not anticipated to continue to increase daily as the market is always full of advances and declines depending on who is doing business on any given day. The fact that blocks fell below the psychological level of $2.00 increased some of the bearishness. There is a good chance buyers will look at the lower price today as a buying opportunity to increase their ownership of supply for later in the year.
BUTTER
The decline of butter was a bit surprising, but with the large amount of butter being offered to the market, it maybe was not too surprising. Even though churning has declined, there remains sufficient supply for current demand. The July Cold Storage report will be released tomorrow and should show a decrease in butter supplies.
OUTSIDE MARKETS SUMMARY
December corn closed down 3.00 cents per bushel at $4.7950, November soybeans closed down 15.75 cents at $13.4600 and December soybean meal closed down $1.50 per ton at $395.00. December Chicago wheat closed up 2.00 cents at $6.2750. October live cattle closed down $1.25 at $178.63. October crude oil is down $0.47 per barrel at $79.65. The Dow Jones Industrial Average is down 175 points at 34,289 with the NASDAQ up 8 points at 13,506.
