MILK
August Class III futures moved back above $17 with a close of $17.22, a gain of 40 cents. This has been a long time in coming, but the proof will be if the market will be able to maintain this gain and hopefully move higher. Traders will remain cautious due to a pattern of a rebound of prices being short-lived. We know that this will change at some point, but whether this is the time is unclear at present. Tuesday was the last day to trade June dairy futures and options. Traders anticipate a Class III price of $17.19 and a Class IV price of $16.39. USDA will release the Federal Order prices Wednesday. July is currently carrying a discount to the expected June prices. However, it may not be discounted very long if the recent price strength is able to hold. Upside potential may be limited due to strong milk production, but an increase in demand would be beneficial. Buyers may see the need to step up and purchase for upcoming demand and to take advantage of current prices. USDA will release the Acreage and Quarterly Stocks reports Wednesday morning, which may provide some direction for grain futures. They will also release the May Agricultural Prices report Wednesday afternoon, which will provide prices used in the calculation of income over feed.
AVERAGE CLASS III PRICES
| 3 Month: | $17.13 |
| 6 Month: | $17.57 |
| 9 Month: | $17.62 |
| 12 Month: | $17.64 |
CHEESE
It certainly was a good sign that cheese prices moved higher. The fact that barrels moved up on unfilled bids without any sellers does bode well that there could be further upside price potential. The concern is that it could be short-lived due to a lot of milk available for processing. However, at current prices, buyers may be willing to step up and purchase more aggressively for future demand.
BUTTER
The volume of butter that came to the spot market Tuesday was enough to satisfy the early aggressive demand, eventually resulting in price declining. The fact that price only declined 0.25 cent with 15 loads traded was positive. Futures show limited increases from month to month but an increase through the end of the year. They do not show any price near $2 in any contracts as far out as they trade. This could change as time moves forward, but for now, it shows limited potential.
OUTSIDE MARKETS SUMMARY
July corn jumped 19 cents, closing at $6.9450. July soybeans gained 2.75 cents, ending at $13.5975, with July soybean meal down $3.20 per ton, closing at $348.40. July wheat declined 6.25 cents, ending at $6.3975. June live cattle gained $0.45, ending at $122.55. July crude oil gained $0.07, ending at $72.98 per barrel. The Dow gained 9 points, closing at 34,292, while the NASDAQ gained 28 points, closing at 14,528.
