Wednesday Closing Dairy Market Update - Spot Milk Prices Increase Slightly

GENERAL OVERVIEW:

Class III futures closed with minor losses as the weakness of cheese had been factored in. Class IV futures posted double-digit gains due to the strength in butter and nonfat dry milk.

MILK:

Milk receipts are increasing as temperatures have returned more to normal. Some cows may not bounce back completely depending on their stage of lactation, but milk output is expected to remain above a year ago. The calendar will turn to August by the end of this week. The demand for milk from bottlers is expected to increase as they begin to prepare to fill the school pipeline. Some schools will reopen for the new school year by the middle of the month. This will not tighten the milk supply but will reduce some of the milk available to the cheese vat. This is seasonal and may not have much impact on the availability of supplies or market prices. The AMS weekly prices were not as expected by traders, with the July milk futures adjusting. The July Class III price decreased 12 cents, and the July Class IV price increased 11 cents after the report. The federal order class prices will be released on Aug. 5.

AVERAGE CLASS III PRICES:

3 Month:	$16.35
6 Month:	$16.83
9 Month:	$17.02
12 Month:	$17.15

CHEESE:

Spot milk is less available following the recent hot weather. This has the spot milk price in the Central Region ranging from $1.00 to $5.00 over class. This is likely to increase as more milk will move to bottling in the next few weeks. Cheese production over the past week was steady to stronger.

BUTTER:

It was interesting to see the volume of butter purchased on the spot market today. Buyers were willing to purchase much of what was offered and needed to bid higher to get it. I reported incorrectly on the midday comments that there were no unfilled bids or uncovered offers remaining at the close of spot trading. There were 24 unfilled bids and 67 uncovered offers remaining.

OUTSIDE MARKETS SUMMARY:

December corn closed down 8.75 cents per bushel at $4.7175, November soybeans closed down 27.25 cents at $11.9275, and December soybean meal closed down $4.30 per ton at $323.50. September Chicago wheat closed down 1.75 cents at $6.6075. October live cattle closed up $1.80 at $223.98. September crude oil is up 5.53 per barrel at $84.79. The Dow Jones Industrial Average is down 1,153 points at 51,594, with the NASDAQ down 434 points at 24,443.

Wednesday Midday Dairy Market Summary - Butter Finally Shows Strength

OUTSIDE MARKETS SUMMARY:

CORN:	9 Lower
SOYBEANS:	30 Lower
SOYBEAN MEAL:	$5.70 Lower
LIVE CATTLE:	$2.00 Higher
DOW JONES:	818 Points Lower
NASDAQ:	242 Points Lower
CRUDE OIL:	$5.38 Higher

MIDDAY MARKET UPDATE:

The block cheese price declined 1.00 cent to close at $1.5450 with 13 loads traded. The barrel cheese price declined 2.50 cents to close at $1.5525 with no loads traded. The dry whey price increased 1.50 cents with 3 loads traded. So far, this has had little impact on Class III futures, with contracts ranging from 7 cents lower to 2 cents higher. The butter price increased 1.00 cent to close at $1.3900 with 78 loads traded. The price initially increased 3.75 cents before slipping back. No unfilled bids and no uncovered offers were remaining at the close of spot trading. All of the uncovered offers from Tuesday were absorbed. This puts the butter market in a better position for upside price potential. Grade A nonfat dry milk increased 2.75 cents to close at $1.4475 with 26 loads traded. There were no unfilled bids or uncovered offers remaining at the close. Class IV futures are 25 cents lower to 13 cents higher. Butter futures are 0.02 lower to 0.75 cent higher. Dry whey futures are unchanged to 0.30 cent higher. Cheese futures are 1.20 cents lower to 0.20 cent higher. Nonfat dry milk futures are 0.95 -- 1.82 cents higher.

Wednesday Morning Dairy Market Update - Milk Futures May Bounce

OPENING CALLS:

Class III Milk Futures:	8 to 12 Higher
Class IV Milk Futures:	Mixed
Butter Futures:	1 to 2 Higher

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	3 to 4 Lower
Soybean Futures:	12 to 14 Lower
Soybean Meal Futures:	$3 to $4 Lower
Wheat Futures:	2 to 4 Lower

MILK:

Milk futures may rebound somewhat as traders who sold contracts may liquidate those positions to take a profit. Most of the trading activity remains short-term as the uncertainty of price movement keeps traders cautious. Hot weather has impacted milk output, but buyers in the spot market are not concerned about the milk supply. USDA estimates significantly higher milk output in 2027. Dairy processors expect continued strong milk production and are either expanding or building new facilities. The trend of higher milk output and increased cow numbers remains intact at the present time.

CHEESE:

Cheese prices may see further weakness following a similar pattern as the previous time the market fell back from the high. Buyers may hold back as they see the willingness of sellers to move supplies.

BUTTER:

There are indications cream supplies are tightening. Other Class II manufacturers are utilizing higher volumes of cream, limiting the availability of supply to churns. This has some manufacturers turning to the spot market for supplies. Tighter cream supplies have increased cream prices. This should support the butter price at some point.