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.

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.