OVERVIEW:
Class III milk futures did not keep pace with the spot price increases but were quick to decline when there was weakness in the block price. The September Milk Production report will not be released on Wednesday.
MILK:
It was not an exciting day for milk futures. The only thing noteworthy is that it was a high-volume day for the November Class III contract, with more than 1,080 contracts traded. It has been a while since trading volume in any contract reached more than 1,000. The contract had a price swing of 39 cents but closed with little price change from Monday. The weakness of the block cheese prices increased selling, but milk futures did not react as much as they should have due to futures not keeping pace with underlying spot prices when they were moving higher. Class IV futures were under pressure despite the butter price holding steady and nonfat dry milk increasing slightly. Class IV futures continue to remain substantially lower than Class III. It certainly is good that milk prices are based on the higher of the calculations again.
AVERAGE CLASS III PRICES:
| 3 Month: | $16.87 |
| 6 Month: | $16.62 |
| 9 Month: | $16.72 |
| 12 Month: | $16.90 |
CHEESE:
Cheese is entrenched in the range it has been in over the past year. The action today solidifies the idea that price will likely remain in the range through the end of the year. The inability of prices to increase seasonally does not bode well for the market. It is uncertain as to the extent of the decline in inventory that has taken place. Due to the government shutdown, the September Cold Storage report will not be released on Friday.
BUTTER:
At least the butter price remained steady today. The sellers did not want to press the market lower as buyers were content to purchase what was offered at yesterday's price. The inability of the price to bounce left a negative tone in the market. There is a risk of further loss.
OUTSIDE MARKETS SUMMARY:
December corn closed down 3.50 cents per bushel at $4.1975, November soybeans closed down 1.00 cent at $10.3075 and December soybean meal closed up $1.90 per ton at $286.90. December Chicago wheat closed down 4.50 cents at $5.0025. December live cattle closed up $1.78 at $245.43. December crude oil is up $0.52 per barrel at $57.54. The Dow Jones Industrial Average is up 218 points at 46,925, with the NASDAQ down 37 points at 22,954.
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