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.
