MILK
Class III milk futures showed strong gains today with prices gaining more than what was lost on Monday. Futures adjusted higher due to being oversold on Monday and fueled today by the gain in the block cheese price. The October contract moved back to $21.00 but was unable to hold near that level. Class IV futures were mixed with most contracts remaining unchanged due to minor movement in underlying cash. The Global Dairy Trade auction trade-weighted average increased 0.5%. There were 186 bidders with 35,965 metric tons sold. Anhydrous milk fat price increased 1.2% from the previous event at $6,912 per metric ton or $3.14 per pound. The butter price declined 2.4% at $6,489 per metric ton or $2.94 per pound. Buttermilk powder increased 3.4% at $2,756 per metric ton or $1.25 per pound. Cheddar cheese price increased by 1.3% at $4,275 per metric ton. Lactose increased by 16.1% to $928 per metric ton or $0.42 per pound. Skim milk powder declined 2.7% to $2,539 per metric ton at $1.15 per pound. Whole milk powder increased 2.4% at $3,259 per metric ton or $1.48 per pound.
AVERAGE CLASS III PRICES
| 3 Month: | $20.59 |
| 6 Month: | $20.23 |
| 9 Month: | $19.64 |
| 12 Month: | $19.31 |
CHEESE
The increase in underlying cash prices should not have resulted in the strength seen in Class III futures. However, the futures market was oversold and the strength of the block cheese price triggered short covering and buying interest. The weakness of dry whey should have limited some of the strength of futures, but traders paid little attention to the weakness. Cheese prices may see further gains on Wednesday as the strength may cause traders to step back to wait for higher prices.
BUTTER
Supply and demand seem to be balanced leaving the butter prices entrenched in a sideways pattern. It was anticipated that price would have resumed the trend higher by now as buyers would look ahead to upcoming Fall and holiday demand. However, butter production has been sufficient to keep supply available for demand.
OUTSIDE MARKETS SUMMARY
December corn closed down 1.75 cents per bushel at $4.0525, November soybeans closed down 14.00 cents at $10.2675 and December soybean meal closed down $5.20 per ton at $326.60. September Chicago wheat closed up 3.75 cents at $5.4325. October live cattle closed up $0.05 at $179.05. September crude oil is up $0.26 per barrel at $73.20. The Dow Jones Industrial Average is up 294 points at 38,998 with the NASDAQ up 167 points at 16,367.
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