OVERVIEW:
There was some life in the Class III market again, but that may be short-lived unless further gains can be seen in underlying cash. The implications of the August Milk Production report may limit the potential for extended price rallies.
MILK:
The strength in Class III futures through the first quarter of 2026 is not sufficient to change the bearish attitude of traders. Cow numbers continue to increase to the highest level seen in my records since 1999. If culling begins to increase due to low milk prices, it may take some time for it to have a significant impact on the milk supply. The August Milk Production report indicated only four of the top 24 states showed a decline in milk production from a year ago. Washington declined 8.1%. Illinois was down 3.7%. Both New Mexico and Ohio were down 0.2%. The other 20 states showed increased production from a year ago. The greatest increase was in Kansas with an increase of 20.4%, followed by South Dakota with a gain of 11.3%. Georgia gained 8.3%, Idaho was up 8.2% and Texas increased 7.7%. California gained 1.7% and Wisconsin up 2.0%.
AVERAGE CLASS III PRICES:
| 3 Month: | $17.16 |
| 6 Month: | $17.04 |
| 9 Month: | $17.04 |
| 12 Month: | $17.09 |
CHEESE:
The increase in the block cheese price does not indicate that support has been found. Buyers likely needed to get some cheese to fill orders and turned more aggressive. There is little reason for prices to increase very much or trend higher. Cheese demand seems to be balanced, with the block and barrel prices remaining close to each other.
BUTTER:
The price is now back to the lowest level since Aug. 23, 2021. End-users still have not turned into aggressive buyers even though the price is at a four-year low. They are confident prices will remain low through the end of the year. The low price should stimulate demand, but that has yet to be seen.
OUTSIDE MARKETS SUMMARY:
December corn closed up 4.50 cents per bushel at $4.2625, November soybeans closed up 1.00 cent at $10.1200 and December soybean meal closed down $2.80 per ton at $277.30. December Chicago wheat closed up 9.75 cents at $5.2050. December live cattle closed down $1.48 at $238.75. November crude oil is up $1.13 per barrel at $63.41. The Dow Jones Industrial Average is down 89 points at 46,293, with the NASDAQ down 216 points at 22,573.
.jpg)
