OVERVIEW:
Milk futures closed higher with support stemming from the significant increase in the butter price. The positive close makes traders hopeful that next week will be better. The USDA released the August Cold Storage report showing a decline in butter and cheese stocks.
MILK:
Class III futures have rebounded over the past two days in response to stronger underlying cash prices. Traders have bought into the market in the hope of making a quick profit. There is a strong chance that the increase in underlying cheese prices may find increased selling interest at higher prices. Class IV futures have been increasing over the past three days, and they have moved back above the $15.00 level. Tuesday is the last trading day for September futures and options, with the Federal Order prices being announced on Wednesday. Both the Class III and Class IV October contracts are holding a significant discount below the September contracts. Underlying cash prices will need to post consistently higher prices to close or exceed the gap. The USDA will release the July Agricultural Prices report on Tuesday, which will provide most of the prices used in the calculation of income over feed for the Dairy Margin Coverage program.
AVERAGE CLASS III PRICES:
| 3 Month: | $17.09 |
| 6 Month: | $17.04 |
| 9 Month: | $17.03 |
| 12 Month: | $17.10 |
CHEESE:
It was nice to see cheese prices increase again today, with buyers being aggressive and able to move the block price higher despite the selling interest. The five unfilled bids under the market would suggest further buyer interest on Tuesday. Time is running out for a seasonal sustained price rally, but any price correction and ongoing buying interest will provide support to the market.
BUTTER:
It is unlikely that buyers in the market were aggressive due to the inventory level reported on the cold storage report. The report, released Friday, was for August. That had already been in the market for a month, and new lows for the year were recorded last week. Buyers wanted to take advantage of the low price and stepped up to the plate.
OUTSIDE MARKETS SUMMARY:
December corn closed down .50 cent per bushel at $4.2150, November soybeans closed down 3.25 cents at $10.1050 and December soybean meal closed up $.80 per ton at $275.40. December Chicago wheat closed down 0.25 cent at $5.1950. December live cattle closed down $0.48 at $233.83. November crude oil is down $2.59 per barrel at $63.13. The Dow Jones Industrial Average is up 69 points at 46,316, with the NASDAQ up 107 points at 22,591
.jpg)
