OVERVIEW:
Milk futures took a beating again today, posting substantial losses from lower spot prices. There is no bottom in the market as buyers see sufficient supplies, leaving them unaggressive. The August Milk Production report was bearish, with output up 3.2% over a year ago and cow numbers continuing to increase.
MILK:
Class IV futures were hit hard, with the October and November contracts barely hanging on to $15.00. If these prices come to fruition, they would be the lowest Class IV prices since March 2021. It does not appear that the butter price has found a bottom, which may put further pressure on futures. Class III futures fell, eliminating the gains of last week. The USDA released the August Milk Production report, which showed milk production in the top 24 states up 3.3%. Totaling 18.8 billion pounds. July production was revised to be 4.3% higher than the previous year. That was a revision higher of 0.7%. Milk production per cow was 28 pounds above August 2024 at 2,068 pounds. Cow numbers increased by 7,000 head from July. Milk production in the U.S. increased 3.2% from August 2024. Milk output was revised to 4.2% higher than a year ago for July. Production per cow was 27 pounds above a year ago. The number of cows in the country increased by 10,000 head from July, with the nation's herd totaling 9.53 million head. This is the highest cow numbers since my records back to 1999. This is a bearish report and shows that lower milk prices have not triggered heavier culling to this point.
AVERAGE CLASS III PRICES:
| 3 Month: | $16.92 |
| 6 Month: | $16.84 |
| 9 Month: | $16.89 |
| 12 Month: | $17.00 |
CHEESE:
Cheese prices showed further weakness and may continue to show weakness as a result of increasing milk production. Increasing cheese production will limit the decrease in cheese inventory for the rest of the year. Demand is not expected to increase sufficiently to reduce inventory as much as usual over the next few months. Buyers remain confident the supply of cheese will remain ample.
BUTTER:
A few weeks ago, I mentioned that there was a low unfilled bid that remained at the close of spot trading at $1.67. Many times, bids or offers that are placed far from the market eventually are where the price goes. It certainly appears that this will be another example of that. There is no indication of a bottom in the market.
OUTSIDE MARKETS SUMMARY:
December corn closed down 2.25 cents per bushel at $4.2175, November soybeans closed down 14.50 cents at $10.1100 and December soybean meal closed down $3.90 per ton at $280.10. December Chicago wheat closed down 11.75 cents at $5.1075. December live cattle closed up $4.50 at $240.23. November crude oil is down $0.12 per barrel at $62.28. The Dow Jones Industrial Average is up 66 points at 46,382, with the NASDAQ up 158 points at 22,789.
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