MILK
It was a big day for Class III futures with the October through January contracts posting new contract highs. The September contract is back above $21 with November near $21. Traders were not shy about buying futures aggressively due to the gains in underlying cash. This improves the outlook for milk prices through the end of the year. The USDA echoed that sentiment with an increase in the average milk prices in the World Agricultural Supply and Demand Estimates report released Monday. They raised the average 2024 Class III price to $18.40, up $0.15 from the July estimate, and raised the 2025 average price to $18.65, up $0.20. The Class IV price was raised by $0.05 to $20.80 for this year and raised $0.35 next year to $20.95. The all-milk price was raised by $0.05 this year to an average of $22.30 and raised by $0.25 to an average of $22.75 for 2025.
USDA reduced their estimate for milk production this year to 226.3 billion pounds, down 600 million pounds from the July estimate. If this comes to fruition, milk output this year will fall below 2023 by 100 million pounds. Milk production for the next year was reduced by 900 million pounds to 228.2 billion pounds.
AVERAGE CLASS III PRICES
| 3 Month: | $21.07 |
| 6 Month: | $20.56 |
| 9 Month: | $19.89 |
| 12 Month: | $19.54 |
CHEESE
The block cheese price broke out of the trading range, moving to the highest level since Aug. 21, 2023. The barrel cheese price reached the highest level since June 14. It is uncertain whether buyers have stepped up to purchase aggressively for upcoming demand or if current orders need to be filled. USDA cautiously raised their estimate for the cheese price this year with an increase of just 0.50 cent from the July estimate to an average of $1.8250 per pound with the same for 2025 moving the average price to $1.86 per pound. The dry whey was raised 3 cents to 47 cents per pound and raised 2.50 cents next year to 45 cents per pound.
BUTTER
The butter price increased to the highest level since July 8. Class IV futures did not react very much to the gain with futures already having it factored in. USDA reduced their estimate for the butter price this year to $2.99 per pound, down 1.50 cents from the July estimate. The average price for next year was raised 2 cents to an average of $2.9850. The Grade A nonfat dry milk price was raised a penny to an average of $1.1950 this year and up 3 cents to an average of $1.22 for 2025.
OUTSIDE MARKETS SUMMARY
December corn closed up 6.50 cents per bushel at $4.0150, November soybeans closed down 16.50 cents at $9.8600 and December soybean meal closed down $5.80 per ton at $304.60. September Chicago wheat closed down 5.75 cents at $5.3675. October live cattle closed down $1.13 at $180.03. September crude oil is up $3.22 per barrel at $80.06. The Dow Jones Industrial Average is down 141 points at 39,357, with the NASDAQ up 35 points at 16,781.
