OVERVIEW:
Class III futures closed mixed, receiving little direction from the spot market. The increase in the butter price was offset by the weakness of nonfat dry milk. The September Agricultural Prices report is scheduled to be released on Friday but will not be due to the government shutdown.
MILK:
The news of the market is consistent with milk production increasing seasonally and components being stronger than a year ago. The weather remains favorable for cow comfort, and there are sufficient supplies of feed available. Much of the feed supply is of good quality. The spreads between Class III and Class IV futures continue to widen. I track the price calculation based on the spot prices each day. If the spot prices today were the average prices for a month, the Class III price would be $19.19, and the Class IV price would be $14.30. This will not be what they will be, as the weekly average AMS prices may be somewhat different, and it is only one day of cash prices out of a month. It does show a substantial difference between the two classes that may remain for quite some time based on the current market fundamentals.
The September Agricultural Prices report will not be released on Friday as scheduled due to the government shutdown. It will not make any difference because there would be no Dairy Margin Coverage price payment anyway for the month due to the income over feed price not being low enough to trigger a payment.
AVERAGE CLASS III PRICES:
| 3 Month: | $17.25 |
| 6 Month: | $16.99 |
| 9 Month: | $17.00 |
| 12 Month: | $17.13 |
CHEESE:
The stability in the cheese market today did not provide market direction. It is uncertain whether buyers are not willing to bid higher or if the current price levels indicate support under the market. Cheese demand is improving, but so is milk production, resulting in increased cheese production. Most of the cheese buying for packaging for the holidays has been finished. Fresh cheese demand will remain as retail demand improves.
BUTTER:
The butter price avoided falling back to the low with light buying supporting the price today. Sellers may not be willing to push the price lower for the time being. The focus of butter production is for retail, as consumers will increase their purchases for the holiday season.
OUTSIDE MARKETS SUMMARY:
December corn closed down 3.75 cents per bushel at $4.3025, January soybeans closed up 13.25 cents at $11.0775 and December soybean meal closed up $6.90 per ton at $315.60. December Chicago wheat closed down 8.00 cents at $5.2425. December live cattle closed up $0.20 at $231.10. December crude oil is up $0.09 per barrel at $60.57. The Dow Jones Industrial Average is down 110 points at 47,522, with the NASDAQ down 377 points at 23,581.
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