MILK
Class milk futures showed good gains supported by the strength of barrel cheese. Futures increased with some contracts posting double-digit gains but failing to make new highs. It may take further gains in cheese prices to push futures above the highs. The action in the cash market would suggest this could take place on Wednesday, but things may change by that time. Milk production is steady in many areas while some others indicate further declines are being seen. Milk production should be near the lows for the year but may remain that way as temperatures in many areas remain above normal. Many farms have been able to harvest good quality feed which will be beneficial for milk production and reduce the cost of other ingredients in the rations. This may improve milk production but not to the extent that output will exceed the previous year. That may be difficult to achieve with lower cow numbers.
AVERAGE CLASS III PRICES
| 3 Month: | $23.43 |
| 6 Month: | $22.10 |
| 9 Month: | $21.13 |
| 12 Month: | $20.69 |
CHEESE
The barrel cheese price set a record high of $2.5650. This is 3.50 cents higher than the previous record set on November 2, 2020. Buyers remained active into the close suggesting there is potential for further upside. The block cheese price has been confusing as it seems to have reached a buyer threshold. The wide block/barrel spread may not be maintained for very long, but it is unclear which one will move to narrow the gap. The average price for blocks in August was $2.0298 compared to $1.9126 for July. The average for barrels was $2.1235 compared to $1.9239 for July. The average for dry whey was 57.14 cents compared to 52.23 cents in July.
BUTTER
There is sufficient butter for demand with buyers unconcerned over supply through the end of the year. Churning remains active with inventory higher than a year ago. Inventory needs to be used to supplement fresh production to meet demand. This is usual during this time of year. The level of demand will dictate how rapidly stocks will decline. The average price for butter in August was $3.1431 compared to $3.1103 in July. The average Grade A nonfat dry milk price was $1.2607 compared to $1.1981 in July.
OUTSIDE MARKETS SUMMARY
December corn closed up 1.75 cents per bushel at $4.1250, November soybeans closed up 1.50 cents at $10.0600 and December soybean meal closed down $2.30 per ton at $321.50. December Chicago wheat closed down 2.75 cents at $5.7575. October live cattle closed up $1.58 at $178.80. October crude oil is up 1.10 per barrel at $71.19. The Dow Jones Industrial Average is down 16 points at 41,606 with the NASDAQ up 36 points at 17,628.
