The September issue of the National Milk Producers Federation and Dairy Management Inc. Dairy Market Report is out. This month’s report indicates that the outlook for milk prices remains positive as dairy product prices and demand mostly kept pace with rising supplies in August. At the same time, inventories of key products are building as dairy exports continue to suffer from lagging world demand. As a result, the Margin Protection Program will probably pay benefits for a fourth two-month period this year.

Butter and American-type cheese prices rose in August as domestic demand for cheese and milkfat in all products mostly continues to keep pace with supply growth. However, inventories of key dairy products are building slowly, and exports continue to suffer from reduced demand, extremely low world prices and intensified competition for available business. Following its steep fall from historic levels,the all-milk price has stayed just below $17 per hundredweight since February. The margin under the Margin Protection Program was $7.45 per hundredweight for July, and will likely be just under $8.00 for August, yielding an MPP margin between $7.50 and $8.00 for the July-August payment period.