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Milk futures continue steep decline

Futures Markets copy

In Class III trade at the Chicago Mercantile Exchange, milk futures were lower, with the most active months down sharply in a continued technical freefall, which started the previous Friday. September was down $.50 at $16.60, October was $.44 lower at $16.57, November was down $.41 at $16.41, and December was $.36 lower at $15.94.

Over in the spot market, cash cheese was mixed. Blocks were up $.0025 at $1.74. There were a total of six trades, three at the closing price. Barrels were $.07 lower $1.68 with one trade at that price. The last unfilled bid was on one load at $1.655.

Butter was down $.02 at $2.0575. There was one load sold at that price and one at $2.0675. The last unfilled bid was on one load at $2.0525. The last offer uncovered was for two loads at $2.10.

Nonfat dry milk was $.0025 higher at $.85 with one load sold at that price. The last unfilled bid was on two loads at $.85. The last uncovered offer was for two load at $.8525.

The USDA says cream supplies are tight at some butter plants, but churning remains active. Many of those processors are getting ready for fourth quarter needs, so print butter output is rising. Some Central region manufacturers are microfixing. Domestic demand is strong from retail and food service. Butter inventories are large, as reflected in the recent cold storage report.

Cheese manufacturers in the Northeast and Central are keeping production levels as high as possible, despite tight milk supplies and a lack of available spot loads. Cheddar and American stocks are large, but fresh cheese stocks are lighter. Because of the price difference, export demand for U.S. cheese is slow.

Cooler temperatures in northern parts of the country helped increase milk production in those areas. Spot loads of milk are scarce in the Central region, but some Eastern marketers did report spot loads at discounts later in the week. Bottled milk sales are up as schools re-open, creating more interest in condensed cream from other dairy manufacturing sectors. Ice cream makers are using the increased supply of cream, but production is expected to see its seasonal decline soon.

At the retail level, total conventional dairy ads were down 2% on the week, but organic ads were up 35%. The price spread for a half gallon of organic and conventional milk was $2.66 and the spread on 8 ounce shredded cheese was $1.53. Conventional cheese ads were down 17% on the week and organic ads dropped 52%.

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