GENERAL OVERVIEW:
It was not a good day for Class III futures. Premium continues to be removed from contracts. Class IV futures did not respond to the increase in nonfat dry milk due to the weakness in butter.
MILK:
Class III milk futures continue to erode further weakness seen as traders see little upside potential for cheese prices in the foreseeable future. Price weakness seen at this time of year is usual, and weakness of this magnitude is not seen. It is not a matter of demand being very slow, but more the fact that milk production is higher than a year ago and continues to increase. Both the interest and high prices of beef on dairy calves and the increased manufacturing capacity have allowed farms to add cows and increase milk production even though milk prices are low. Class IV milk prices are very strong, with better blend prices depending on the utilization percentage of Class IV in the Federal Order. The price spread between Class III and Class IV continues to widen, with a spread price of around $5.15.
AVERAGE CLASS III PRICES:
| 3 Month: | $15.55 |
| 6 Month: | $15.89 |
| 9 Month: | $16.25 |
| 12 Month: | $16.53 |
CHEESE:
The block cheese price was steady, but not necessarily because it found support, but likely because no buyers or sellers showed up to accomplish business. No buyers or sellers showed up during spot trading. Increased cheese production is the result of increased milk production. The result is that production outpaced demand in August. It is uncertain whether the same will be seen in September and the rest of the year.
BUTTER:
The butter price remains choppy but in an overall downtrend. It is uncertain whether the price will retest the low of $1.30 established on January 13. Retail butter demand has shown signs of improving, but whether the increase will be sufficient to tighten the market is uncertain. Buyers have not seen the need to be aggressive in the spot market as manufacturers continue to offer loads of butter on the spot market.
OUTSIDE MARKETS SUMMARY:
December corn closed down 5.25 cents per bushel at $5.2300, November soybeans closed down 30.75 cents at $12.8825, and December soybean meal closed down $11.60 per ton at $359.40. December Chicago wheat closed down 14.50 cents at $6.8875. December live cattle closed down $1.35 at $220.80. November crude oil is up $0.90 per barrel at $93.31. The Dow Jones Industrial Average is down 347 points at 51,482, with the NASDAQ down 248 points at 26,820.
