GENERAL OVERVIEW:
Class III milk futures lost further ground today as the weakness in block cheese pressured futures. Class IV futures showed limited price movement and activity. The July Milk Production report will be released on Friday afternoon.
MILK:
Class I demand continues to increase as schools reopen for the year. Demand from manufacturing remains steady in recent weeks. More milk is moving from the Central region to the Southeast to satisfy the need for fluid milk. After the hot weather period ended, milk production has been improving but not to the level it was before the hot weather. Class III futures continue to struggle, with the September contract falling below $17.00 again. The September Class III contract is now about $2.00 below the September Class IV contract. The Class I price for September was announced at $17.04, down $1.72 from August and down $1.66 from September 2025. USDA will release the July Milk Production report on Friday afternoon. I estimate July milk production to be 1.8% above July 2025. I estimate cow numbers to show an increase of 5,000 head from June.
AVERAGE CLASS III PRICES:
| 3 Month: | $16.87 |
| 6 Month: | $17.12 |
| 9 Month: | $17.22 |
| 12 Month: | $17.34 |
CHEESE:
The block cheese price has nearly retraced back to the low of $1.5200 on Aug. 5. Buyers may step in more aggressively near that level again unless supply remains plentiful, giving buyers the confidence to remain complacent. Cheese production remains steady with previous weeks, even though more milk is moving to bottling.
BUTTER:
Butter production remains mostly steady. Some plants are increasing output as cream supplies slowly increase. Ice cream production is slowing, allowing for more cream to be available for other products. Domestic demand remains steady but is expected to improve in the coming weeks.
OUTSIDE MARKETS SUMMARY:
December corn closed up 5.50 cents per bushel at $5.0350, November soybeans closed down o.75 cent at $12.3650, and December soybean meal closed down $1.80 per ton at $323.80. December Chicago wheat closed up 2.50 cents at $7.0000. October live cattle closed up $0.78 at $218.00. October crude oil is up $1.86 per barrel at $86.25. The Dow Jones Industrial Average is down 704 points at 52,759, with the NASDAQ down 264 points at 26,067.
