GENERAL OVERVIEW:
Class III futures finally showed strength. Traders covered their short positions, but it may be short-lived unless the block cheese price increases further. Class IV futures extended gains due to the increase in nonfat dry milk. August income over feed was $9.34.
MILK:
Class III milk futures finally saw strong gains. The November contract moved above $16.00 at one point today, with March back above $17.00. The question is whether this will hold as the overall fundamentals of the market remain bearish. It is difficult to say whether seasonal buying interest will continue, as there is sufficient cheese for demand. Traders focused on the minor increase in nonfat dry milk rather than the weakness in butter in Class IV futures. The average prices for the August income over feed were released. The average corn price was $4.45, up $0.19 per bushel from July. The premium/supreme alfalfa hay price was $243.00 per ton, up $1.00 per ton from July. The soybean meal price was $320.30 per ton, down $17.66 per ton from July. The all-milk price was $19.80, down $0.50 from July. The result is an income over feed price of $9.34. This is the lowest price since February.
AVERAGE CLASS III PRICES:
| 3 Month: | $15.78 |
| 6 Month: | $16.33 |
| 9 Month: | $16.62 |
| 12 Month: | $16.85 |
CHEESE:
The bounce in the block cheese price was welcomed, but it may be short-lived. That is the pattern we have seen for quite some time, and the fundamentals do not suggest otherwise. Strong cheese production keeps sufficient milk available for demand and then some.
BUTTER:
It seemed buying interest was increasing earlier in the week as quite a few infilled bids remained at the close of spot trading. However, that changed today as there were a lot of uncovered offers remaining at the close. It was the largest number of uncovered offers that were ever seen remaining at the close of butter trading. Seasonal buying may not be sufficient to lift prices.
OUTSIDE MARKETS SUMMARY:
December corn closed up 1.50 cents per bushel at $5.0225, November soybeans closed down 9.00 cents at $12.8400, and December soybean meal closed down $3.60 per ton at $353.30. December Chicago wheat closed up 7.00 cents at $6.8275. December live cattle closed up $0.48 at $223.18. November crude oil is up $2.45 per barrel at $92.87. The Dow Jones Industrial Average is up 21 points at 50,927, with the NASDAQ up 11 points at 26,872.
