Fluid Milk and Cream - Western U.S. Report 39

Farm-level milk output in the West is reported as steady, with only minimal increases over last month's volumes. In California, milk availability has loosened due to unplanned downtime at several plants, diverging from the rest of the Western region, where milk supplies remain tight. The Pacific Northwest and Mountain States report tight milk availability is pushing manufacturers to seek spot purchases to meet production needs, but they are finding very little milk available. The Southwest reports no change this week in milk volumes or demand. 

Class I demand is increasing and continues to grow progressively week over week. Class II demand is also up with pressure from some facility improvements that have taken place in the Western Region. Class III and Class IV demand remain stable. Transportation costs for all fluid milk have increased measurably week over week, with haulers reporting losses due to contracted rates no longer covering actual hauling costs. 

Cream shows a mixed tone. Cream is heavy in the Mountain States, with loads available across the region. In contrast, availability in California has tightened, and some contacts report having to purchase more spot loads than they preferred. Condensed skim milk availability remains tight, with production reported as steady. Multiple sources across all Western regions note a marked increase in demand.

Thursday Midday Dairy Market Summary - Block Cheese Shows Continued Weakness

OUTSIDE MARKETS SUMMARY:

CORN:	2 Lower
SOYBEANS:	3 Lower
SOYBEAN MEAL:	$4.40 Higher
LIVE CATTLE:	$1.30 Lower
DOW JONES:	244 Points Lower
NASDAQ:	79 Points Lower
CRUDE OIL:	$3.36 Higher

MIDDAY MARKET UPDATE:

The block cheese price fell 3.00 cents to close at $1.3275 with 2 loads traded. There were no unfilled bids, with 3 uncovered offers remaining at the close. The barrel cheese price remained unchanged at $1.4225 with no loads traded. The dry whey price increased 0.75 cent to close at 80.50 with no loads traded. Class III futures are 22 cents lower to 2 cents higher. The butter price slipped 0.75 cent to close at $1.3575 with 14 loads traded. There were 25 unfilled bids and 4 uncovered offers. This is the second day in which there were more bids than offers remaining at the close of spot trading. Grade A nonfat dry milk increased 2.00 cents to close at $2.1700 with 6 loads traded. Class IV futures are 12-23 cents higher. Butter futures are 0.75 cent lower to 0.55 cent higher. Dry whey futures are 0.50 cent lower to 0.25 cent higher. Cheese futures are steady to 1.90 cents lower. Nonfat dry milk futures are 0.72 – 2.37 cents higher. The August Livestock Slaughter report will be released this afternoon, indicating the volume of dairy cattle slaughtered during the month. 

Thursday Morning Dairy Market Update - Class IV Futures Continue to Find Support

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	Steady to 1 Higher

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	Mixed
Soybean Futures:	6 to 7 Higher
Soybean Meal Futures:	$3 to $5 Higher
Wheat Futures:	2 to 3 Lower

MILK:

Fundamentals in the Class III market remain largely unchanged, as they have been for some time. There is little reason for prices to rise much, as milk supplies are sufficient. There continue to be numerous reports of expansions taking place. Processing facilities that have expanded have opened the door for farms to increase milk production. Although calf prices have decreased somewhat, they continue to provide significant income for the dairy. The USDA will release the August Livestock Slaughter report today. The report may show an increase in dairy cattle slaughter, but that has been offset by higher cow numbers.

CHEESE:

The block cheese price is struggling to find support, with the potential for price to revisit the low. Barrels have held despite the weakness in blocks. However, the price is likely to adjust lower, as it has in the past, to move in line with blocks. Barrels are not used in the Federal Order class price calculations, so it does not make any difference where the price is.

BUTTER:

The bounce in the butter price on Wednesday is likely to be short-lived. However, the positive development is that unfilled bids remaining at the close of spot trading on Wednesday far exceeded the remaining offers. Maybe this will be the beginning of a market shift, and butter will see increasing support.