OVERVIEW:
It was a volatile week for the cash cheese and milk futures contracts. Cheese prices reached a temporary peak, while butter may have found support. Milk production remains above a year ago.
MILK:
It was a volatile week for Class III milk futures, as early strength gave way to substantial declines, only to rebound somewhat at the close in the nearby months. This may be characteristic of the market in the near term as buyers look ahead to demand through the end of the year. They will balance supply with demand. Class IV milk futures declined much of the week, finding some stability on Friday as the butter price bounced.
Supply is expected to be sufficient for both cheese and butter, with price strength dependent on demand. Schools are and will be opening, increasing the demand for fluid milk. Milk is moving to deficit areas, pulling supplies from other areas that have a more abundant supply. However, this is not expected to have much of an impact on milk supplies or prices. Australian dairy exports declined 17.9% on a milk solids equivalent in June. Cheese exports declined 22.7%, and skim milk exports declined 6.1%. A substantial gain was seen in whole milk powder exports with an increase of 47.9%.
AVERAGE CLASS III PRICES:
| 3 Month: | $17.95 |
| 6 Month: | $17.96 |
| 9 Month: | $17.91 |
| 12 Month: | $17.93 |
CHEESE:
For the week, blocks declined 7.50 cents with 17 loads traded. The weekly average price is $1.8345. Barrels declined 1.75 cents with no loads traded. The weekly average price is $1.8250. Dry whey gained 2 cents with five loads traded. The weekly average price is 59.65 cents. The block cheese price fell hard on Thursday with minor weakness Friday, while barrels declined Thursday and Friday.
BUTTER:
For the week, butter declined 5.50 cents with 36 loads traded. The weekly average price is $2.3010. Grade A nonfat dry milk declined 0.50 cent with 23 loads traded. The weekly average price is $1.2605. Butter may have found a bottom, but it is too early to tell. Buyers may step up more aggressively due to the low price. However, churning is active, and bulk butter continues to be put into storage.
OUTSIDE MARKETS SUMMARY:
December corn closed up 8 cents per bushel at $4.0525, November soybeans closed up 14 cents at $10.4250 and December soybean meal closed down $0.50 per ton at $294.50. September Chicago wheat closed up 3 cents at $5.0650. October live cattle closed up $3.83 at $230.65. September crude oil is down $0.80 per barrel at $63.16. The Dow Jones Industrial Average is up 35 points at 44,946, with the NASDAQ down 88 points at 21,623.
