MILK
Class III futures moved in the opposite direction of cash as the market adjusted prices due to the losses being overdone on Tuesday. If there is further cash weakness on Thursday, selling pressure may resume moving futures lower. Milk production is mixed across the country with some areas seeing stable production while some areas show production increasing slightly. Milk production will not grow by leaps and bounds but should begin to improve over the next few weeks. Fall weather will improve cow comfort. Cow numbers continue to run below a year ago, but production per cow is improving, exceeding the level of a year ago. If the current trend continues, milk output could exceed the previous year in September or October. Class I demand remains strong as bottling is being done to supply the needs of the school systems. Class II demand is variable. The Farm Bill will expire on September 30th if nothing is done to extend it or pass it. It likely will not be passed as they still cannot agree on a bill.
AVERAGE CLASS III PRICES
| 3 Month: | $23.44 |
| 6 Month: | $22.09 |
| 9 Month: | $21.15 |
| 12 Month: | $20.69 |
CHEESE
Interestingly, spot milk prices this week are at class to as much as $1.50 below class. Milk production is not overly abundant but sufficient to supply manufacturers with the milk needed to maintain production schedules. The spot cheese market would suggest supplies have increased substantially. The barrel cheese price has declined by 19.50 cents over the past week with no trading activity. The market developed a price void as buyers leapfrogged over each other to purchase barrels. This exaggerated the price, which is now correcting.
BUTTER
Butter continues to exhibit weakness with the buyers comfortable with supplies. The price will become low enough that buyers will turn more aggressive. The August Cold Storage report to be released on Thursday should show a significant decline in inventory, but stocks are expected to remain higher than a year ago.
OUTSIDE MARKETS SUMMARY
December corn closed up 3.50 cents per bushel at $4.1525, November soybeans closed up 11.00 cents at $10.5325 and December soybean meal closed up $2.30 per ton at $328.20. December Chicago wheat closed up 11.25 cents at $5.8925. December live cattle closed down $0.08 at $184.33. November crude oil is down $1.87 per barrel at $69.69. The Dow Jones Industrial Average is down 293 points at 41,915 with the NASDAQ up 8 points at 18,082.
