GENERAL OVERVIEW:
Milk futures were under pressure today, with Class III futures showing slightly greater weakness than Class IV futures. The underlying cash is not providing much excitement for traders.
MILK:
Milk futures eroded further as the underlying cash prices provided little support. The October Class IV contract is more than $3.00 above the October Class III contract. The continued strength of nonfat dry milk is providing substantial support to the market. The fact that there has been little strength in cheese and butter prices does not bode well for the market. Any impact of milk production from hot weather is soon to be past, with milk output expected to follow a seasonal path as cow comfort improves. Sufficient milk is expected to be available for all areas of bottling and manufacturing. The current production trend may leave buyers less aggressive, as they do not need to buy aggressively to build inventory. Inventory may build naturally as the production of dairy products remains strong.
AVERAGE CLASS III PRICES:
| 3 Month: | $16.33 |
| 6 Month: | $16.62 |
| 9 Month: | $16.89 |
| 12 Month: | $17.09 |
CHEESE:
The barrel cheese price remains steady with little to no activity. Blocks continue to show weakness with limited buying interest. Buyers generally are more aggressive at this time of year, but they see little need to be, as supply remains available. Any seasonal purchases that will take price will be limited. The current demand is not exceeding supply.
BUTTER:
The butter price may retest the low from the end of July at $1.38. A substantial amount of butter offered for sale remains at the close of each spot trading day. As long as this continues, buyers will remain unaggressive.
OUTSIDE MARKETS SUMMARY:
December corn closed down 3.25 cents per bushel at $5.3350, November soybeans closed up 6.50 cents at $13.1625, and December soybean meal closed down $5.30 per ton at $349.80. December Chicago wheat closed up 13.00 cents at $7.4700. October live cattle closed up $4.08 at $217.03. October crude oil is up $2.60 per barrel at $94.08. The Dow Jones Industrial Average is down 628 points to 52,786, with the NASDAQ down 86 points to 26,421.
