MILK
Beef prices continue to increase which is having an impact on the desire to continue to cull more heavily. Farmers are pushing the pencil on income and are raising the bar on what production is needed from cows to maintain them in the herd. Milk production is increasing after the hot weather has subsided, but the gains may be limited by continued heavy culling. The current milk supply is sufficient for bottling and manufacturing. Milk prices will have limited upside price potential as long as current demand remains stable. Demand should improve as the calendar moves closer to the holiday season, but the limiting factor could be how much product will be purchased ahead of time. The government is far from reaching an agreement on a new farm bill. Earlier there was hope and the determination to adopt a new farm bill on time but that has now fallen by the wayside. Now it will be up to Congress to pass an extension to the current farm bill. If the current farm bill were to expire, it would trigger laws dating back to 1938 and 1949 that would force USDA to take steps to dramatically raise the price of milk, grains, and other commodities. Collectively, the 1938 and 1949 provisions are known as "permanent law" and have remained in the books to ensure Congress either passes a new farm bill or extends the expiring legislation. The extension of the deadline is an occurrence with every farm bill so it will not be unexpected.
AVERAGE CLASS III PRICES
| 3 Month: | $18.33 |
| 6 Month: | $18.32 |
| 9 Month: | $18.35 |
| 12 Month: | $18.42 |
CHEESE
Domestic demand is steady while export demand remains below a year ago. There are some signs that export demand is improving but may not move above year-earlier levels for a period. That leaves more available to the domestic market at the present time. Spot milk prices are reported at $0.50 to $1.50 over class with cheese plants receiving limited or no offers for milk from handlers.
BUTTER
Cream supply has tightened a bit recently, but supply remains sufficient for churning to remain active. Fresh production is being supplemented with inventory to meet demand, yet inventory continues to remain above a year ago. Ice cream production is beginning to wind down as cooler weather moves in. A large volume of the purchasing of butter surfaced from Asian buyers during the recent Global Dairy Trade auction providing some hope for increased international demand.
OUTSIDE MARKETS SUMMARY
December corn closed down 1.75 cents per bushel at $4.8050, November soybeans closed up 10.75 cents at $13.6050 and December soybean meal closed up $4.60 per ton at $399.40. December Chicago wheat closed down 3.50 cents at $5.9375. October live cattle closed up $2.33 at $185.48. October crude oil is up $1.64 per barrel at $90.16. The Dow Jones Industrial Average is up 332 points at 34,907 with the NASDAQ up 112 points at 13,926.
