MILK
The past weeks have been very volatile for Class III futures. The underlying cash prices fell last week but gained back what they lost and then some this week. Even though cheese prices regained the losses of last week, futures did not. Traders moved futures more in line with the underlying prices. There is some uncertainty over the upside price potential of underlying cash prices. The greater weakness was seen in dry whey and its impact on Class III prices. USDA will release the World Agricultural Supply and Demand report on Monday showing their estimates for milk production, milk prices, and dairy product prices for this year and next. It will be interesting to see whether they increase the potential for milk output next year due to the reduced culling and slowly increasing cow numbers. The consensus is for an increase in corn and soybean production which may put further pressure on prices. This will keep feed prices lower as supplies will be plentiful.
AVERAGE CLASS III PRICES
| 3 Month: | $20.78 |
| 6 Month: | $20.32 |
| 9 Month: | $19.71 |
| 12 Month: | $19.38 |
CHEESE
For the week, blocks gained 10.75 cents with 17 loads traded. Barrels gained 7.50 cents with seven loads traded. Buyers were active but strong seasonal buying has not yet kicked in. The dry whey price declined 4.75 cents with 10 loads traded. Cheese futures carry a premium to cash with the October contract indicating the average cheese price could reach $2.05 per pound. This would be nice to see but the path will likely be volatile.
BUTTER
For the week, butter slipped 0.75 cent with 11 loads traded. Grade A nonfat dry milk declined 4 cents with 27 loads traded. The stability of the butter price and the weakness of nonfat dry milk left Class IV futures trading in a tight range with very light trading activity. Buyers and sellers are comfortable in the current price range with business done as needed.
OUTSIDE MARKETS SUMMARY
December corn closed down 2.00 cents per bushel at $3.9500, November soybeans closed down 5.75 cents at $10.0250 and December soybean meal closed down $5.70 per ton at $310.40. September Chicago wheat closed up 5.00 cents at $5.4250. October live cattle closed up $3.13 at $181.15. September crude oil is up $0.65 per barrel at $76.84. The Dow Jones Industrial Average is up 51 points at 39,498 with the NASDAQ up 85 points at 16,745.
