MILK
Milk production is not overwhelming the market with manufacturers handling the current milk supply easily. Some plants are looking for extra milk but are having greater difficulty finding it. What is available is commanding up to $1.00 over class with no discounted milk available. This makes it confusing that cheese plants continue to offer cheese to the spot market aggressively. Buyers are not moving their bids waiting for sellers to eventually come down to their bid. This will continue until sellers stop offering cheese to the market. If that happens, buyers will step back in more aggressively to take advantage of the lower prices. This would move Class III futures higher but will keep traders cautious unless the market proves itself. Milk production in the country is not increasing very much but is holding at current low levels. Farms are maintaining cow numbers with culled cows being replaced with heifers. Farms continue to exit the dairy business, but cows move to other operations keeping numbers steady. Farms will have a brief reprieve with higher milk price in September, but October Class III milk is currently showing a potential decrease of about $1.60. The opposite is true for Class IV as futures are $2.00 higher than in September. USDA will release the August Agricultural Prices report tomorrow providing the average prices used to determine income over feed for the Dairy Margin Coverage program.
AVERAGE CLASS III PRICES
| 3 Month: | $17.33 |
| 6 Month: | $17.55 |
| 9 Month: | $17.79 |
| 12 Month: | $17.98 |
CHEESE
Cheese prices just cannot find a bottom as sellers remain aggressive and buyers remain unaggressive. Retail demand for cheese is steady to stronger but it is not strong enough to tighten supplies or to give the impression that supply will tighten. Restaurant demand is steady as overall traffic is somewhat lighter across much of the country. There are thoughts that buyers of cheese may become more aggressive in October as the days move closer to the holidays. However, upward price potential may be limited.
BUTTER
Price moved to another record high today with gains slowing. The magnitude of the gain in price seems to increase the odds that a void may have developed under the market. Once buyers are satisfied, there may be no further interest in buying at this level. The one thing to make note of is that there have been no low bids placed in the spot market indicating a lower level at which buyers could be interested. Thus, maybe there is no void at the present time.
OUTSIDE MARKETS SUMMARY
December corn closed up 5.25 cents per bushel at $4.8850, November soybeans closed down 2.75 cents at $13.0050 and December soybean meal closed up $2.40 per ton at $391.50. December Chicago wheat closed down .75 cent at $5.7875. December live cattle closed up $2.25 at $190.43. November crude oil is down $1.87 per barrel at $91.81. The Dow Jones Industrial Average is up 116 points at 33,666 with the NASDAQ up 108 points at 13,201.
