MILK
Class III milk prices posted firm losses on Wednesday with all nearby contract months posting double-digit losses. October futures fell 17 cents per cwt, moving to $16.76, while November contracts led the complex lower with a 26 cent per cwt loss, falling to $17.07. With September contracts now officially retired from the complex, more focus is quickly moving to the November contracts as the spot month October contract will start taking into account cash market formulas over the coming weeks.
Grain and livestock markets remained extremely quiet throughout most of the trading session, leaving trades that followed the rest of the ag complex with limited underlying incentives to make aggressive moves in dairy markets. Outside markets were the most volatile in nature with firm gains across the stock market while aggressive triple-digit losses quickly developed in the crude oil market.
AVERAGE CLASS III PRICES
| 3 Month: | $17.07 |
| 6 Month: | $17.57 |
| 9 Month: | $17.84 |
| 12 Month: | $18.03 |
CHEESE
Cheddar cheese prices were steady to lower Wednesday with barrel cheese remaining unchanged at $1.5425 per pound. Three loads of barrel cheese were sold on the exchange with no additional offers or bids remaining on the trading floor.
Block cheese prices posted a firm loss, falling 4 cents to $1.68 per pound based on a single load traded on the exchange. Like barrel cheese markets, no additional bids or offers remained. The narrowing of the barrel-to-block price spread is not unusual, but aggressive price shifts can quickly lead to additional market volatility in the coming days.
Cheese production remained relatively stable in August with the monthly dairy product report showing fractional changes in all cheese production. Total cheese production in August was 1.15 billion pounds, 0.2% below August 2022 and 0.1% below July 2023 levels. American cheese production was slightly above year-ago levels but fell 2% below July production levels. These changes are expected to be viewed as neutral for the market and likely have very limited market impact.
BUTTER
Cash butter prices increased moderately on Wednesday with limited activity seen on the exchange. Butter prices moved 1 cent per pound higher to $3.43, although no trade developed on the exchange. The overall market remained generally quiet throughout most of the day, although the production results in the afternoon dairy production report brought most of the attention to the butter complex.
Butter production in August 2023 fell to 140 million pounds. This is a 2.1% reduction from year-ago levels and a 12.1% tumble from July levels.
It is uncertain at this point if it will have a significant short-term impact on butter prices in futures trade or the exchange-traded market, but the focus on lower production levels, and likely lower stocks ahead of the upcoming holiday season, should have a positive impact on portions of the dairy complex in the upcoming weeks.
OUTSIDE MARKETS SUMMARY
December corn closed down 1.25 cents per bushel at $4.86, November soybeans closed up 0.2 cents at $12.73 and December soybean meal closed up $0.30 per ton at $372.00. December Chicago wheat closed down 8.5 cents at $5.60. December live cattle closed up $0.372 at $186.02. November crude oil is down $5.01 per barrel at $84.22. The Dow Jones Industrial Average is up 127 points at 33,129 while the NASDAQ is up 176 points at 13,236.
