OVERVIEW:
Class III futures were mostly lower while Class IV futures suffered double-digit losses across the board. Butter and nonfat dry milk prices falling to new lows do not provide support to the market.
MILK:
Class III milk futures showed minor gains for the week despite the increase in cheese prices. Traders remain bearish and did not respond to the strength of the underlying cash. The current fundamentals do not suggest continued strength through the end of the year. This is the overriding factor that keeps futures from responding to cash strength. The market will need to prove itself before the attitude of traders change. This may be difficult with increasing milk production and higher cow numbers. The September Milk Production and Cold Storage reports are scheduled to be released next week but will not be due to the government shutdown. The only information we have is the regional report, which indicates stronger milk production during the month. Reports on the inventory of butter and cheese have been variable, providing little indication of the effect of demand on inventory.
AVERAGE CLASS III PRICES:
| 3 Month: | $16.69 |
| 6 Month: | $16.51 |
| 9 Month: | $16.64 |
| 12 Month: | $16.86 |
CHEESE:
For the week, blocks increased 7.50 cents with 18 loads traded. Barrels increased 6.00 cents with one load traded. Dry whey increased 2.00 cents with no loads traded. Interestingly, Class III futures did not respond to these price increases during the week.
BUTTER:
For the week, butter declined one cent with 30 loads traded. Grade A nonfat dry milk decreased 1.75 cents with five loads traded. The butter price closed at a new low for the year, increasing the bearishness of the market. Each price increase turns out to be a new low once the buying interest is satisfied.
OUTSIDE MARKETS SUMMARY:
December corn closed up 0.75 cent per bushel at $4.2250, November soybeans closed up 8.75 cents at $10.1950 and December soybean meal closed up $4.10 per ton at $281.00. December Chicago wheat closed up 1.25 cents at $5.0375. December live cattle closed down $6.05 at $241.83. November crude oil is up $0.08 per barrel at $57.54. The Dow Jones Industrial Average is up 238 points at 46,191, with the NASDAQ up 117 points at 22,680.
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