MILK:
May, June and July milk futures fell substantially during the week as a result of the weakness of cheese prices. The June contract moved above $20.00 at the beginning of the week, only to close below $19.00 Friday. There has been a lot of hype in the market due to increasing feed prices and the impact that will have on milk supply. There is no doubt it will have an impact, but it may not be prominent until sometime down the road. Some farmers are aggressively purchasing cows and replacement heifers at auctions even though feed prices continue to escalate. They may already have feed on hand or forward contracted enough to last through the rest of the summer with hope of replenishing supply at harvest time. There is concern over dryness in parts of the country and that is being reflected in grain futures. So far, production per cow remains high with cow numbers the highest since 1995. This will keep milk flowing as long as there is the desire to push cows to make milk and grab the higher prices. Profitability is tightening substantially, being impacted from numerous areas other than just feed prices. The rising cost of many things such as lumber, fertilizer, parts, baler twine, plastic bale wrap, etc. is squeezing margins.
AVERAGE CLASS III PRICES:
| 3 Month: | $18.97 |
| 6 Month: | $19.13 |
| 9 Month: | $18.90 |
| 12 Month: | $18.67 |
CHEESE:
For the week, block cheese price declined 5.25 cents with 19 loads traded. Barrel cheese price declined 7.25 cents with 12 loads traded. Dry whey price declined 3.25 cents with 2 loads traded. This kept block cheese entrenched in a sideways trading pattern that it has been in since mid-March. Barrel price had been trending higher since mid-April, but that has come to a halt with the decline this week. Demand is good with product readily available.
BUTTER:
For the week, butter price increased 1.75 cents with 16 loads traded. Grade A nonfat dry milk price declined 3.25 cents with 28 loads traded. The previous surge in demand for butter as restaurant traffic increased has slowed with the pipeline now filled. Ongoing demand will need to be met. Indications are that retail demand has decreased, but the decrease is being made up with demand from the food service industry.
OUTSIDE MARKETS SUMMARY:
May corn jumped 13.25 cents, closing at $7.7275. May soybeans jumped 15.50 cents, closing at $16.21 with May soybean meal up $14.80 per ton, closing at $442.50. May wheat gained 9.25 cents, ending at $7.7350. June live cattle increased $0.55, closing at $116.02. June crude oil gained $0.19, closing at $64.90 per barrel. The DOW gained 229 points, closing at 34,778 while the NASDAQ gained 119 points, closing at 13,752.
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