Wednesday Closing Market Update - September Milk Production Up 0.2%

MILK

Class III milk futures closed higher and indicate further gains in overnight trade may be likely based on the September Milk Production report. September milk production was up 0.4% from September 2020 in the top 24 states. Production per cow declined for the second consecutive month with a decrease of 4 pounds, averaging 1,937 pounds. Cow numbers fell 22,000 head from August with current numbers 48,000 more than a year ago. Milk production in all 50 states was up just 0.2%, totaling 18.075 billion pounds. Per-cow output declined 1 pound, averaging 1,918 pounds. Cow numbers declined 25.000 head from August with the nation's dairy herd 27,000 head more than a year ago. This is showing a significant contraction of cow numbers and milk production. This puts third-quarter milk production at 55.9 billion pounds, up 0.9% from the same period last year. The average number of dairy cows during the third quarter was 9.45 million head. This trend might potentially tighten the supply of milk if demand remains strong and could result in higher milk prices over the next months. The November Class I price is $17.90, up $0.90 from October, but $0.06 lower than November 2021.

AVERAGE CLASS III PRICES

3 Month:	$18.78
6 Month:	$18.49
9 Month:	$18.38
12 Month:	$18.35

CHEESE

Cheese demand is following a seasonal level with increasing orders being placed and filled. Manufacturing output is strong, leaving less available to the spot market. There is no milk shortage, but supplies may tighten if cow numbers continue to decline and production per cow keeps moving lower. The greater concern this year is not of supply shortage, but of the shortage of employees and truck drives to haul supplies to where they need to be.

BUTTER

Cream supply has tightened in the Northeast region, leaving plants generally relying on regular supply. Spot cream is tight and at higher prices, leaving many unwilling to purchase off the spot market. Orders are increasing more rapidly than usual as end users are concerned over the ability to receive supplies in time to meet demand. Consumers may also purchase earlier than usual to avoid the possibility of not being able to purchase product when they need it. Earlier ordering may result in earlier delivery which may be met with earlier demand.

OUTSIDE MARKETS SUMMARY

December corn gained 9 cents, closing at $5.3925. November soybeans jumped 17.50 cents, closing at $12.4550, with December soybean meal up $5.80 per ton closing at $328.40. December wheat gained 13.25 cents, closing at $7.4925. October live cattle gained $0.95, ending at $125.95. November crude oil gained $0.91, ending at $83.87 per barrel. The Dow closed 152 points higher at 35,609, while the NASDAQ slipped 7 points, closing at 15,122.

September Milk Production up 0.4 Percent, July-September Milk Production up 0.9 Percent

September Milk Production up 0.4 Percent 

Milk production in the 24 major States during September totaled 17.3 billion pounds, up 0.4 percent from September 2020. August revised production, at 17.9 billion pounds, was up 0.7 percent from August 2020. The August revision represented a decrease of 75 million pounds or 0.4 percent from last month's preliminary production estimate. Production per cow in the 24 major States averaged 1,937 pounds for September, 4 pounds below September 2020. The number of milk cows on farms in the 24 major States was 8.93 million head, 48,000 head more than September 2020, but 22,000 head less than August 2021. 

July-September Milk Production up 0.9 Percent 

Milk production in the United States during the July - September quarter totaled 55.9 billion pounds, up 0.9 percent from the July - September quarter last year. The average number of milk cows in the United States during the quarter was 9.45 million head, 48,000 head less than the April - June quarter, but 74,000 head more than the same period last year.

Wednesday Midday Dairy Market Summary - Cheese Prices Hold

Both block and barrel cheese prices remained unchanged at $1.75 and $1.81 respectively with no loads traded in each. Butter price increased 2.75 cents, closing at $1.80 and eliminating Tuesday's loss. There were 5 loads traded. Grade A nonfat dry milk price declined a penny to $1.52 with 2 loads traded. Dry whey price remained unchanged at 60 cents with no loads traded. Even though cheese prices remained steady, Class III futures are higher through April 2022. This shows the optimism traders have at the current time. Overall, Class III futures are 3 cents lower to 11 cents higher. Class IV futures are unchanged to 15 cents lower. Butter futures are 0.15 cent to 1.90 cents higher. Dry whey futures are 0.77 cent to 1.22 cents higher. I estimate milk production on the September Milk Production report to be up 1.0% with cow number 5,000 head lower than August.