GENERAL OVERVIEW:
The weakness continued in milk futures due to declines in cheese, butter, and dry whey. Buyers had no interest in being aggressive and are letting sellers reduce their offers before they are willing buyers. There is no indication that demand has decreased.
MILK:
Class III futures have now eliminated the gains realized since the beginning of July. It is as if the price increases should never have taken place. However, it did provide an opportunity to establish downside price protection on the bounce. It will be much more difficult to generate buying interest from traders going forward. The market will need to prove itself before traders would get excited to buy into the market for the longer term. Class IV futures continue to decline, nearly reaching the lows established in late December 2025. The August through February contracts are below $17.00 and below the Class III contracts for the same months.
AVERAGE CLASS III PRICES:
| 3 Month: | $16.43 |
| 6 Month: | $16.89 |
| 9 Month: | $17.06 |
| 12 Month: | $17.18 |
CHEESE:
The block cheese price follows a similar pattern as in early May, but it is falling faster than it did at that time. Buyers have not seen the need to become aggressive. There is no concern over supply, and buyers are not interested in purchasing to build inventory ahead of what is necessary.
BUTTER:
The butter price cannot find a bottom. The price dropped to the lowest level since January 16. Buyers are not concerned about the supply of butter as sellers want to move supplies. Rather than build inventory and speculate on stronger prices through the end of the year, they keep selling to manage inventory. The volume of unfilled bids at the end of the spot trading period suggests there is much more to come to the market with a limited upside price potential.
