OVERVIEW:
Class III milk futures took a hit with contracts closing at new lows. This is really getting serious as there seems to be no bottom in sight. Lower prices are not impacting milk production or the growth in cow numbers.
MILK:
The trend for increased milk supply continues with higher cow numbers and increased production per cow. The high prices for calves continue to provide significant income for dairy farms that are breeding beef on dairy to part of their herd. High replacement prices are keeping more cows in the herds. This offsets the low milk prices. The strong supply trend is mirrored internationally. The United States reported a notable 3.2% increase in August milk output, while South American producers Argentina and Uruguay saw sharp rises of 9.8% and 3.0% respectively. The European Union also recorded a more modest 0.6% year-over-year gain in July. This collective increase from most key exporters creates a significant global supply overhang. This may cap any upward price momentum despite signs of opportunistic buying by some customers.
AVERAGE CLASS III PRICES:
| 3 Month: | $16.51 |
| 6 Month: | $16.52 |
| 9 Month: | $16.67 |
| 12 Month: | $16.86 |
CHEESE:
For the week, blocks declined by 9.00 cents with 18 loads traded. Barrel cheese declined 6.00 cents with 18 loads traded. Dry whey increased 0.50 cent with 12 loads traded. The block cheese price has eliminated the gain since September 29. The price may again revisit the lows from September unless buyers turn aggressive. However, if they do, it may only be temporary as price increases are short-lived. The barrel cheese price was not under as much pressure as the blocks.
BUTTER:
For the week, butter fell 14.50 cents with 47 loads traded. Grade A nonfat dry milk declined 3.25 cents with seven loads traded. The bounce in butter today does not indicate the bottom has been reached. There remains a strong possibility that new lows will be seen next week.
OUTSIDE MARKETS SUMMARY:
December corn closed down 5.25 cents per bushel at $4.1300, November soybeans closed down 15.50 cents at $10.0675 and December soybean meal closed down $1.90 per ton at $275.00. December Chicago wheat closed down 8.00 cents at $4.9850. December live cattle closed up $2.63 at $242.53. November crude oil is down $3.25 per barrel at $58.26. The Dow Jones Industrial Average is down 879 points at 45,480, with the NASDAQ is down 820 points at 22,204.
.jpg)
