OVERVIEW:
It was another dismal day for milk futures, with Class IV contracts showing substantial losses. The weakness in butter is very much a concern. Cheese output in some regions is steady to higher.
MILK:
Milk futures are in a free fall with no support. Futures are following the underlying cash, but in the case of Class IV futures, traders are anticipating further weakness before it happens. Class IV futures plummeted, with the November contract falling solidly below $16.00. All Class IV contracts through July 2026 are below Class III contracts. It has been quite a few years since that happened. The World Agricultural Supply and Demand report will be released on Friday and is expected to show a significant lowering of expected milk and dairy product prices. The USDA generally changes its estimates based on what prices have been doing before the report. The estimate for milk production may remain similar to the August report. Temperatures in many areas are forecast to increase next week, which will temper the gains in milk production, but that will not have a significant impact on the supply or the price of milk.
AVERAGE CLASS III PRICES:
| 3 Month: | $16.73 |
| 6 Month: | $16.82 |
| 9 Month: | $16.90 |
| 12 Month: | $16.98 |
CHEESE:
Reports from the Western regions of the country indicate that spot milk is available and supplies are sufficient for cheese production. There is sufficient cheese available across the country as spot prices continue to decline. Prices have fallen to the bottom of the trading range. If the block price falls below $1.5750, it would fall back to the lowest level since April 2024. Barrels have shown a similar pattern with the low of $1.55 needing to hold, or the same would be true. The spot market is a fresh cheese market, and there seems to be limited demand for fresh cheese.
BUTTER:
The butter price has fallen 69.25 cents since July 7. This is similar to September 2024, when the price fell 57.50 cents by mid-October. The price is now at the lowest level since Oct. 25, 2021. Lower demand from both the retail and the food service industries keeps buyers unaggressive and content to purchase on price weakness. The price decline today, with no buyers showing up at the market, points to further weakness on Friday.
OUTSIDE MARKETS SUMMARY:
December corn closed up 2.75 cents per bushel at $4.1975, November soybeans closed up 8.25 cents at $10.3350 and December soybean meal closed up $1.90 per ton at $287.70. December Chicago wheat closed up 6.50 cents at $5.2150. October live cattle closed up $1.13 at $232.28. October crude oil is down $1.40 per barrel at $62.27. The Dow Jones Industrial Average is up 617 points at 46,108, with the NASDAQ up 157 points at 22,043.
