The August Federal order Class III benchmark milk price was announced by the U.S. Department of Agriculture at $16.57 per hundredweight, up $1.12 from July but is 34 cents below August 2016. It is the highest Class III price since February 2017 and equates to $1.42 per gallon, up from $1.33 in July.

The eight month average stands at $16.09, up from $14.13 at this time a year ago, $16.07 in 2015 and $22.49 in 2014.

Class III futures settled Sept. 1 with September at only $16.15; October, $16.36; November, $16.16 and December at $16.01. That would result in a 2017 average of $16.12, up from $14.87 in 2016 and $15.80 in 2015

The August Class IV price is $16.61, up a penny from July, $1.96 above a year ago, and the highest Class IV price since November 2015. The Class IV average is now at $15.46, up from $13.57 a year ago and $13.53 in 2015.

California’s comparable Class 4b cheese milk price is $16.26, up 97 cents from July and the highest since December 2016, but is 8 cents below a year ago and 30 cents below the Federal order Class III price. Its eight-month average is at $15.28, up from $13.44 a year ago, $14.58 in 2015 and $20.30 in 2014.

The 4a butter-powder price is $16.68, up 27 cents from July and the highest 4a since November 2014, $2.69 above a year ago. It’s eight month average, at $15.27, is up from $13.22 a year ago and $13.38 in 2015.

Meanwhile, dairy product prices dropped the last week of August as traders weighed the heavy stocks and anticipated the Labor Day holiday. The block Cheddar closed Sept. 1 at $1.54 per pound, down 11 cents on the week after losing 10 1/2-cents the previous week, 14 cents below a year ago and 24 3/4-cents below the Aug. 1 level. The barrels closed at $1.52, down 3 3/4-cents, 12 cents below a year ago and down 14 cents on the month. Twenty cars of block traded hands on the week at the CME and 21 of barrel.

The lower prices and weakening dollar lead many to believe exports should be multiplying. Dairy Market News says milk is “fairly available for cheese processing in the Midwest,” and spot milk prices are at $1 under to $1 over Class. Processors report pre-holiday spot milk availability, which is expected to reduce following the long weekend but cheese orders are mixed. Contacts expect with current market prices experiencing downtrends, some buyers are waiting for further declines. The optimism of the markets has diminished. Even with shifts in production and fairly bullish demand, contacts suggest market prices will be negatively affected by the current inventory levels of barrel cheese.

Western cheese producers are not having trouble finding milk and cheese output is robust. Cheese demand is mixed and inventories are building slightly. With school startups and the unofficial end of summer at hand, consumer grilling demand is slowing, but cut and wrap demand is solid. Contacts suggest some requests for mozzarella and other pizza cheeses have yet to develop, leading some to speculate that end users bought supplies earlier in the summer.

“It continues to be the case that we have an adequate to heavy supply of milk in many regions of the U.S. except for arguably California,” FC Stone’s Dave Kurzawski said. “Producers have been incentivized to expand following the aftermath of the 2013-2014 bull market. Many parts of the country are struggling with an oversupply of milk currently as processing capacity has not kept pace.”

Cash butter was also caught in the downdraft, closing Sept. 1 at $2.5075 per pound, lowest since June 9, 2017. That’s down 12 cents on the week, 45 3/4-cents above a year ago and down 17 1/2-cents on the month but the cheapest butter on the planet. Twenty-eight cars exchanged hands on the week.

Butter demand reports continue to be positive, says DMN. Central producers are reporting more interest in unsalted butter, as global prices are markedly higher than domestic rates. Butter production remains active and the market tone has been fairly steady. Even so, contacts who thought the $3 CME market price was a near term possibility have tempered their expectations. Domestic demand is strong while imports are lower. As a result, inventories are firming in some areas but remain in good balance in other areas, according to DMN.

Grade A nonfat dry milk saw little change, closing Sept. 1 at 86 1/4-cents per pound, up 1 3/4-cents but three-quarter cents below a year ago on seven sales.

“We are still sitting on large (powder) stocks domestically and in the EU which is keeping the market in check,” FC Stone said. “Mexico inquiries are picking up slightly, although competition in the export markets is fierce. Domestically there may be more milk than normal seasonally heading to the dryers as there’s plenty of milk floating around and cheese plants are full.” ❖