OVERVIEW:
Class III futures tried to hold into positive territory but succumbed to selling pressure into the close of trading after futures were settled. Class IV futures posted gains in response to the strength of butter and nonfat dry milk.
MILK:
There are continued reports that milk output continues to decline. Nevertheless, milk production continues to remain above last year. The recent mild temperatures in parts of the nation have resulted in an improvement in production as cow comfort has improved. Overall demand remains steady for all classes of milk, with sufficient milk supply available to meet demand. All schools will be open for the year after the holiday weekend, with milk moving to deficit areas to satisfy demand. Spot milk is available, but the supply is tightening, and prices are increasing. Spot milk in the Midwest is running at class up to $2.00 above. Class III milk futures closed lower despite a valiant effort for some contracts to remain in positive territory. Class IV futures moved in the opposite direction, as strength in butter and nonfat dry milk supported higher trade.
AVERAGE CLASS III PRICES:
| 3 Month: | $17.76 |
| 6 Month: | $17.67 |
| 9 Month: | $17.63 |
| 12 Month: | $17.65 |
CHEESE:
Cheese production is sufficient for demand, limiting the volume of cheese being pulled out of inventory. That may change as demand increases, as recutters and packagers require greater volumes for gift boxes. They are seasonally aggressive buyers through September as they prepare for holiday demand. However, demand has been slower than last year, which has changed the usual price movement of the market.
BUTTER:
The bounce in the butter price was not unexpected, as low prices should increase the interest of buyers. The problem today is that buyers were not able to purchase anything despite higher prices. Trying to take advantage of lower prices sometimes does not accomplish what was initially expected. It would not be a surprise to see the butter price show further strength again tomorrow.
OUTSIDE MARKETS SUMMARY:
December corn closed up 4.00 cents per bushel at $4.1000, November soybeans closed up .50 cent at $10.4800 and December soybean meal closed down $.90 per ton at $287.30. December Chicago wheat closed up 4.75 cents at $5.2900. October live cattle closed down $2.60 at $236.93. October crude oil is up $0.45 per barrel at $64.60. The Dow Jones Industrial Average is up 72 points at 45,637, with the NASDAQ up 115 points at 21,705.
