MILK
Class III futures showed strong gains over the past two weeks. Underlying cash prices increased, and the market was oversold. The initial gains on Tuesday were due to the market correcting from being oversold with further support from the strength of cheese prices. The October Class III price closed above $21.00 gaining about 80 cents over the past two days. Milk production follows the seasonal pattern with output slowly declining as the summer progresses. The lower milk output has resulted in some areas bringing in loads of milk from other areas to satisfy demand. This will increase as schools open for the school year and more milk will be shifted to deficit areas to fill school needs. Spot loads of milk are more difficult to find with prices at class to as much as $2.00 above. Spot milk prices are expected to increase in the coming weeks.
AVERAGE CLASS III PRICES
| 3 Month: | $20.75 |
| 6 Month: | $20.30 |
| 9 Month: | $19.72 |
| 12 Month: | $19.40 |
CHEESE
Cheese manufacturers indicate milk supply is tightening and will tighten further as milk shifts to the Southeast or other deficit areas as bottlers gear up for school opening. Some plants are actively pursuing loads of milk to keep plants full and to satisfy demand. Overall cheese demand is termed as variable with good demand for cheese curds for summer fairs and other events. The block cheese price is nearing the top of the trading range and a level at which sellers may become more aggressive.
BUTTER
The butter price is not experiencing the volatility of cheese as fundamentals show little change. The price remains in a range as demand is met with fresh production or inventory. The cream supply has tightened but will become more available as bottled milk is standardized for school accounts. The demand for cream from other Class II products keeps the supply tighter and the prices higher.
OUTSIDE MARKETS SUMMARY
December corn closed down 4.50 cents per bushel at $4.0075, November soybeans closed down 8.00 cents at $10.1875 and December soybean meal closed down $8.30 per ton at $318.30. September Chicago wheat closed down 5.00 cents at $5.3825. October live cattle closed up $0.23 at $179.28. September crude oil is up $2.03 per barrel at $75.23. The Dow Jones Industrial Average is down 234 points at 38,763 with the NASDAQ down 171 points at 16,196.
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