OVERVIEW:
Class III milk futures showed nice gains in most contracts, while Class IV futures fell under pressure. Class III and IV futures are near each other in prices through the end of the year. This has been unusual during recent years.
MILK:
Reports continue to indicate milk production and components are declining due to hot summer weather. It has had an impact on milk production from the levels it had been, but production continues to remain higher than a year ago. Higher milk production will not be a problem as long as demand keeps up with it. It seems as if seasonal buying may be taking place in the market despite demand being lower than expected for this time of year. Buyers are looking ahead to the upcoming demand with packagers and recutters making preparations for holiday production. Class IV futures are near the levels of Class III futures, with the strength in cheese and the weakness in butter bringing prices closer together. This has not happened often over the past few years.
AVERAGE CLASS III PRICES:
| 3 Month: | $18.29 |
| 6 Month: | $18.30 |
| 9 Month: | $18.16 |
| 12 Month: | $18.12 |
CHEESE:
Buyers stepped up aggressively after taking a breather on Wednesday. The strength may bring more buyers into the market as they want to purchase cheese before prices increase further. It may be a combination of seasonal buying and the fear of being left behind. International demand remains strong.
BUTTER:
Time is running out for butter to see any significant buying for later demand. Ice cream production is slowing, leaving more cream available for churning. Churning schedules vary depending on when manufacturers schedule downtime for maintenance. The spot butter price moving to the lowest level since May 22 does not bode well for upside price potential.
OUTSIDE MARKETS SUMMARY:
December corn closed up 5.75 cents per bushel at $4.0700, November soybeans closed up 9.25 cents at $9.9375 and December soybean meal closed up $3.90 per ton at $285.20. September Chicago wheat closed up 9.75 cents at $5.1825. October live cattle closed up $2.58 at $232.23. September crude oil is down .47 per barrel at $63.88. The Dow Jones Industrial Average is down 224 points at 43,969, with the NASDAQ up 73 points at 21,243.
