Monday Closing Dairy Market Update - Class III Milk Futures Slide on Profit-Taking

GENERAL OVERVIEW:

Milk futures were under pressure, with Class III futures showing the most weakness. Class IV futures were moderately lower. The weakness of Class III futures seems to be the result of sellers taking advantage of higher prices to establish short positions to hedge or to liquidate long positions for a profit.

MILK:

It was one of those days that did not make sense for the Class III market. The strength of spot cheese prices and a steady dry whey price should have provided support to the market. However, the traders decided to take some profits on previously established long positions, and hedgers sold them to establish short positions to protect milk prices. As selling pressured prices, further pressure ensued as positions needed to be established or profits needed to be protected. The pressure today may extend to the overnight session as the concern over further strength increased with the recent higher prices. Cheese supplies are sufficient for demand. Buyers may begin to look ahead to fall and holiday demand, but it is unlikely they will remain consistently aggressive. The August through November Class III futures are now above Class IV contracts for the same period.

AVERAGE CLASS III PRICES:

3 Month:	$16.91
6 Month:	$17.29
9 Month:	$17.33
12 Month:	$17.36

CHEESE:

The barrel cheese price has moved to the highest level since November 19, 2025. Aggressive buying over the past two weeks is an indication that demand for barrels has improved. Even though there has not been much activity on the daily spot market, the price reflects the demand in the country through regular channels. The block price has increased 24 cents from the low and is knocking on the door of the high of May 6, after which the price fell.

BUTTER:

The butter price remains in a range, but under pressure. Supplies are not overabundant, but sufficient to meet domestic and international demand. Inventory is below a year ago, but steady production leaves buyers comfortable with supplies and little concern over future supplies.

OUTSIDE MARKETS SUMMARY:

December corn closed up 5.50 cents per bushel at $4.7300, November soybeans closed up 23.25 cents at $12.2625, and December soybean meal closed up $5.30 per ton at $323.80. September Chicago wheat closed down 8.75 cents at $6.7400. August live cattle closed up $2.10 at $226.53. September crude oil is up $0.69 per barrel at $82.47. The Dow Jones Industrial Average is down 307 points at 51,839, with the NASDAQ down 12 points at 25,508.

Monday Midday Dairy Market Summary - Cheese and Butter Find Continued Support

OUTSIDE MARKETS SUMMARY:

CORN:	5 Higher
SOYBEANS:	20 Higher
SOYBEAN MEAL:	$3.20 Higher
LIVE CATTLE:	$2.07 Higher
DOW JONES:	130 Points Lower
NASDAQ:	157 Points Higher
CRUDE OIL:	$0.34 Higher

MIDDAY MARKET UPDATE:

The block cheese price increased 0.25 cent to close at $1.63 with 5 loads traded. The barrel cheese price increased 1.50 cents to close at $1.6275 with no loads traded. The dry whey price remained unchanged at 69.50 cents with no loads traded. Class III futures are unchanged to 48 cents lower. Futures are lower due to a round of profit-taking, putting sufficient pressure on the market and triggering further liquidation. The butter price decreased 1.75 cents to close at $1.5725 with 9 loads traded. Grade A nonfat dry milk decreased 2.00 cents to close at $1.4500 with 3 loads traded. Class IV futures have traded from 42-47 cents lower. Butter futures are 0.50 -- 4.20 cents lower. Dry whey futures are 0.42 -- 1.10 cents lower. Cheese futures are steady to 4.50 cents lower. Nonfat dry milk fugtures are 0.10 -- 2.25 cents lower.

Monday Morning Dairy Market Update - Traders Wait For Spot Trading

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	6 to 7 Higher
Soybean Futures:	15 to 17 Higher
Soybean Meal Futures:	$2 to $3 Higher
Wheat Futures:	1 to 2 Higher

MILK:

There may not be much movement in milk futures before spot trading. The attitude has turned more bullish for milk futures due to the strength in cheese prices, but traders will remain cautious as milk production continues to outpace last year. There has been some impact on milk output due to the hot weather, but with the forecast showing temperatures moderating, there will be somewhat of a rebound in production. Milk supplies have been sufficient for demand and that is expected to continue. Cattle prices have been decreasing and may result in lower prices received for calves. However, that is expected to be temporary. Calf sales will continue to be a large part of income for the dairy operation. A significant increase in culling is not expected to surface anytime soon.

CHEESE:

The uncertainty of continued strength in cheese prices may keep traders cautious. Support has been evident in the market as buyers have been more aggressive in purchasing cheese to prepare for later demand. The block price may reach back to the levels of early May, but may have difficulty moving higher based on current market fundamentals.

BUTTER:

The price remains in a sideways range, but is expected to increase in August or September as buyers build inventory to prepare for fall and holiday demand. The current inventory remains below a year ago and export interest remains strong. This may provide support in time as buyers step up to take advantage of the low price.