OVERVIEW:
Class III futures did not reflect the strength of the underlying cash cheese market. The October, November and December contracts extended the gains, but other contracts were mixed. Feed prices on the Agricultural Prices report declined, while the All-milk price increased.
MILK:
Class III milk futures did not respond as much as would have been expected due to the increase in cheese prices. Some of the gains were factored in, but traders are also cautious about the upside price potential. The decline of the butter price increases the potential for weakness. Class IV futures were quick to eliminate some of the gains in response to the butter price falling back. The USDA released the August Agricultural Prices report. The average corn price was $3.96. down $0.35 per bushel from July and up $0.08 from July 2024. The premium/supreme hay price was $222.00 per ton, down $23.00 per ton from July and down $14.00 per ton from July 2024. The All-milk price was $20.90 per cwt, up $0.10 from July, but down $2.70 per cwt from a year ago. This will increase the income over feed price for the month, as the soybean meal average prices will be lower as well when the FSA releases it, hopefully today or tomorrow. Other prices of interest were the alfalfa hay price at $158.00 per ton, down $5.00 per ton from July and down $8.00 per ton from a year ago. The average soybean price was $10.00, down $0.20 per bushel from July and down $0.30 per bushel from August 2024. The average butterfat test was 4.16 compared to 4.13 in July and 4.10 a year ago.
AVERAGE CLASS III PRICES:
| 3 Month: | $17.05 |
| 6 Month: | $17.04 |
| 9 Month: | $17.06 |
| 12 Month: | $17.14 |
CHEESE:
The government shutdown is going to happen as Congress will not be able to pass the twelve appropriation bills, as they have not yet agreed on any of them. The 2018 Farm Bill will also run out at midnight and will impact some government agricultural services. It will not impact prices as parity would come into effect on Jan. 1, 2026, without a new bill. It will be business as usual in the dairy industry and pricing for now.
BUTTER:
The decline in butter today indicates that the buying was not a change in trend, but increased the buying interest as traders took advantage of the lower price. There have been 39 loads traded for the first two days of the week. There is no shortage of supply.
OUTSIDE MARKETS SUMMARY:
December corn closed down 6.00 cents per bushel at $4.1550, November soybeans closed down 8.75 cents at $10.0175 and December soybean meal closed down $2.10 per ton at $273.30. December Chicago wheat closed down 11.50 cents at $5.0800. December live cattle closed up $0.95 at $234.78. November crude oil is down $1.08 per barrel at $62.37. The Dow Jones Industrial Average is up 82 points at 46,398, with the NASDAQ up 69 points at 22,660.
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