Tuesday Closing Dairy Market Update - Another Bearish Day

GENERAL OVERVIEW:

The weakness continued in milk futures due to declines in cheese, butter, and dry whey. Buyers had no interest in being aggressive and are letting sellers reduce their offers before they are willing buyers. There is no indication that demand has decreased.

MILK:

Class III futures have now eliminated the gains realized since the beginning of July. It is as if the price increases should never have taken place. However, it did provide an opportunity to establish downside price protection on the bounce. It will be much more difficult to generate buying interest from traders going forward. The market will need to prove itself before traders would get excited to buy into the market for the longer term. Class IV futures continue to decline, nearly reaching the lows established in late December 2025. The August through February contracts are below $17.00 and below the Class III contracts for the same months.

AVERAGE CLASS III PRICES:

3 Month:	$16.43
6 Month:	$16.89
9 Month:	$17.06
12 Month:	$17.18

CHEESE:

The block cheese price follows a similar pattern as in early May, but it is falling faster than it did at that time. Buyers have not seen the need to become aggressive. There is no concern over supply, and buyers are not interested in purchasing to build inventory ahead of what is necessary.

BUTTER:

The butter price cannot find a bottom. The price dropped to the lowest level since January 16. Buyers are not concerned about the supply of butter as sellers want to move supplies. Rather than build inventory and speculate on stronger prices through the end of the year, they keep selling to manage inventory. The volume of unfilled bids at the end of the spot trading period suggests there is much more to come to the market with a limited upside price potential.

Tuesday Midday Dairy Market Summary - Spot Prices Fall

OUTSIDE MARKETS SUMMARY:

CORN:	7 Higher
SOYBEANS:	3 Higher
SOYBEAN MEAL:	$0.20 Lower
LIVE CATTLE:	$2.17 Higher
DOW JONES:	189 Points Lower
NASDAQ:	25 Points Lower
CRUDE OIL:	$3.48 Lower

MIDDAY MARKET UPDATE:

The block cheese price declined 4.00 cents to close at $1.5550 with 13 loads traded. The barrel cheese price declined 5.25 cents to close at $1.5775 with no loads traded. The dry whey price declined 2.50 cents to close at 65.50 cents with 4 loads traded. Class III futures are 27 cents lower to 1 cent higher with July showing the only gain. The butter price fell 9.00 cents to close at $1.3800 with 8 loads traded. There were 8 unfilled bids and 84 uncovered offers remaining at the close of spot trading. Surprisingly, the sellers want to move supplies at continually lower prices. The only bright spot was Grade A nonfat dry milk with a gain of 2.00 cents, with 2 loads traded. Class IV futures are 4-20 cents lower. Butter futures are 0.50 -- 7.50 cents lower. Dry whey futures are 0.05 -- 0.75 cent lower. Cheese futures are steady to 2.40 cents lower. Nonfat dry milk futures are 1.55 -- 2.60 cents higher.

Tuesday Morning Dairy Market Update - Further Weakness Expected

OPENING CALLS:

Class III Milk Futures:	5 to 10 Lower
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 2 Higher
Soybean Futures:	4 to 6 Higher
Soybean Meal Futures:	$0.50 to $1 Lower
Wheat Futures:	5 to 7 Lower

MILK:

Overnight trading activity indicates further pressure may be put on milk futures ahead of spot trading. There is concern the block cheese prices will see further weakness as buyers hold back to see how aggressive sellers will be. Strong milk output is expected to continue keeping sufficient milk available for bottling and manufacturing. Expansions continue to take place and cow numbers are increasing. The recent weakness in calf prices may have little impact on the desire to increase cow numbers. The overall cattle market remains tight, and the recent weakness in beef prices is expected to be temporary. The U.S. border will be reopening for cattle imports from Mexico beginning in late August, but those imports will not overwhelm the market anytime soon. Expansion of dairy processing facilities continues as milk production is expected to trend higher.

CHEESE:

The block cheese price may see further weakness. Only sellers showed up during spot trading on Monday. Buyers may hold back to see how aggressive they will be. The supply of cheese is expected to remain readily available for demand as milk production remains strong.

BUTTER:

It is uncertain where the butter price will find support. The large amount of uncovered offers remaining at the close of spot trading on Monday suggests further weakness unless the sellers will not offer the supply at a lower price. If not, it would indicate the upside price potential is limited for the time being.