OVERVIEW:
Milk futures came under substantial pressure, with Class III showing significant losses despite the block cheese price increasing. Class IV futures showed more pressure due to the decline in the butter price.
MILK:
New contract lows were again seen in all Class III and Class IV contracts. The usual pattern is for the futures to retrace after a substantial decline, but that may be difficult as bearish fundamentals will keep any price strength limited. Milk output continues to remain higher than a year ago and is expected to remain that way. Even if culling increases, milk production per cow should remain strong. This will leave sufficient milk supply for demand. Milk futures do not provide much hope for higher milk prices throughout the rest of the year, with futures showing little hope for better prices in 2026. Milk production is at or has passed its seasonal low and should improve as cooler weather increases cow comfort.
AVERAGE CLASS III PRICES:
| 3 Month: | $16.93 |
| 6 Month: | $16.99 |
| 9 Month: | $17.07 |
| 12 Month: | $17.18 |
CHEESE:
The higher demand for fluid milk has tightened the supply of milk available for manufacturing. Spot milk prices are at class to $2.00 above class. There is no shortage of milk, but it is not as plentiful as it was during the summer. There is sufficient milk available for cheese production to meet demand. If demand improves, inventory will be sufficient to supplement fresh cheese production to satisfy demand.
BUTTER:
The butter market shows no sign of a bottom. Butterfat exports remain exceptionally strong, with exports in July up 157.7% above July 2024, totaling 12,198 metric tons. Though exports are strong, they are not a large portion of our total production, leaving more than enough for domestic use. One thing is for sure: international demand will remain strong due to the low price.
OUTSIDE MARKETS SUMMARY:
December corn closed down 2.75 cents per bushel at $4.1700, November soybeans closed down 6.00 cents at $10.2525 and December soybean meal closed down $3.20 per ton at $285.80. December Chicago wheat closed down 5.25 cents at $5.1500. October live cattle closed up $0.98 at $231.15. October crude oil is up $1.10 per barrel at $63.73. The Dow Jones Industrial Average is down 220 points at 45,491, with the NASDAQ up 7 points at 21,886.
