Thursday Midday Dairy Market Summary - Blocks Show Further Weakness

OUTSIDE MARKETS SUMMARY:

CORN:	4 Higher
SOYBEANS:	4 Lower
SOYBEAN MEAL:	$9.00 Lower
LIVE CATTLE:	$0.90 Lower
DOW JONES:	33 Points Lower
NASDAQ:	145 Points Lower
CRUDE OIL:	$0.90 Higher

MIDDAY MARKET UPDATE:

Block cheese price initially increased 0.75 cent before sellers became more aggressive, pushing price down 3.25 cents and closing at $2.00 with seven loads traded. Dry whey price declined a penny closing at 44 cents with one load traded. This put traders in a quandary with stronger barrel price offsetting some of the weakness of blocks. Class III futures are mixed from 15 cents lower to 4 cents higher. Butter price increased 2.25 cents, closing at $3.13 with two loads traded. Grade A nonfat dry milk price remained unchanged at $1.56 with no loads traded. Class IV futures are 6 cents lower to 13 cents higher. Butter futures are 1.75 cents lower to 3.09 cents higher. Dry whey futures are 0.07 to 0.75 cent lower. USDA will release the August Cold Storage report Thursday, providing an indication of demand and the information to anticipate market potential later this year.

Fluid Milk and Cream - Western U.S. Report 38

Milk output is steady to higher in California, as cooler weather is contributing to     increased cow comfort. Despite this, contacts report milk production in September is below     previously forecasted levels. Milk availability continues to tighten in the state, though     some stakeholders say milk volumes are available to send to nearby processing facilities.     Demand is steady across all Classes. 

In Arizona, milk production is unchanged this week. Contacts report output is below 2021 volumes. Milk inventories are tight in the state, and some processors are purchasing loads from other parts of the region. In the state, some plant managers are operating reduced schedules when they cannot obtain sufficient loads of milk for processing. Demand for Class II is declining, while Class I and III demands are unchanged. 

Milk production is steady to lower in New Mexico. Contacts report milk output is below some previously forecasted levels due to declining statewide herd populations. Processors in the state are purchasing loads of milk from other states. Across all Classes, demand is unchanged. 

Pacific Northwest contacts report steady milk production. Some contacts say output is below previously forecasted levels, as recent heat waves in the area had a negative impact on production early in September. Milk is available in the area, though some stakeholders say spot loads are becoming scarcer. Some processors report labor shortages are causing increased load and unload times at plants. Demand is steady for Class III, but lighter for Classes I and II. 

Milk output is declining, seasonally, in the mountain states of Idaho, Utah, and Colorado. Contacts say spot availability of milk is tightening, but volumes remain available for them to sell loads to other parts of the region where milk is tighter. Steady demand is present across all Classes. 

Contracted condensed skim sales are steady in the West. Some contacts report strong demand for condensed skim from spot purchasers. Meanwhile, condensed skim availability is tightening. Demand for cream is declining from ice cream makers but is being counterbalanced by strong purchasing from butter makers. Cream volumes are tight, but contacts are reporting some declines in cream multiples. Overall, cream multiples are steady at the bottom but sliding lower at the top.

     Western U.S., F.O.B. Cream
     Price Range - All Classes; $/LB Butterfat:   3.5030 - 4.3946
     Multiples Range - All Classes:               1.1000 - 1.3800
     Price Range - Class II; $/LB Butterfat:      3.9169 - 4.3946
     Multiples Range - Class II:                  1.2300 - 1.3800

Thursday Morning Dairy Market Update - Buyers of Cash May Step Back In

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Steady to 5 Lower
Butter Futures:	Steady to 1 Lower

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 3 Higher
Soybean Futures:	6 to 8 Higher
Soybean Meal Futures:	$3 to $5 Higher
Wheat Futures:	3 to 5 Lower

MILK:

Volatility has increased over the past week as we move closer toward the holiday demand period. Milk production has been holding steady recently with levels likely at the low for the year. Milk production per cow has been very strong, which moves production above year-earlier levels. This keeps sufficient milk available for both bottling and manufacturing. However, spot milk availability has tightened with price generally at class to $0.50 over class. I have heard some offers for spot milk as much as $2.00 higher. Cheese prices have been trending higher, yet traders are uncertain over the level of demand that will be seen relative to other years. Traders are quick to sell milk futures at any sign of price weakness of underlying cash. With the Feds increasing interest rates with further increases expected, the concern over demand the rest of the year is valid.

CHEESE:

The strength of barrel cheese is anticipated to hold block price higher. There has been some good buying interest recently for fresh cheese and that is not expected to end anytime soon. However, buyers will remain cautious over the level of holiday demand. Higher prices may limit the movement of cheese. USDA will release the August Cold Storage report Thursday afternoon.

BUTTER:

Price seems to have reached ceiling with buyers holding back as they see the more aggressive selling. There may be limited downside risk at this point but also limited upside potential. High price may limit end of the year buying. Butter futures currently indicate weaker prices through the end of the year.