Friday Closing Dairy Market Update - June Income Over Feed Was $6.25

MILK

Class III milk futures closed the week lower with August down about 25 cents and September down about 60 cents. More premium has been taken out of later contracts as traders turned more bearish for the longer term. It is interesting to see the decline of futures as block cheese price actually increased this week with barrels down minimally. The pressure came from dry whey declining. USDA released the June Agricultural prices report on Friday, which showed an income-over-feed price of $6.25. Those who chose the $9.50 level for the Dairy Margin Coverage program will receive a payment of $3.25 per cwt for the month. The average corn price for the month was $6, an increase of $0.09 above the May price. The soybean meal price from the Central Illinois Processors report averaged $378.18 per ton, down $42.85 per ton from May. The alfalfa price was $199.00 per ton, up $5 per ton from May. The premium/supreme alfalfa price was $230 per ton, up $4 per ton higher than May. This resulted is a blended alfalfa price of $214.50 per ton, which is used for the income-over-feed calculation. The all-milk price was $18.40, down $0.80 from May. This compares to prices a year ago for corn at $3.16; soybean meal at $288.63; alfalfa price of $179 and an all-milk price of $18.20 per cwt.

AVERAGE CLASS III PRICES

3 Month:	$16.38
6 Month:	$16.86
9 Month:	$16.98
12 Month:	$17.06

CHEESE

Cheese prices did fairly well for the week, but you would not have thought that looking at the movement of Class III futures during the week. Block cheese price increased 5 cents with three loads traded. Barrel cheese declined, but the decline was minimal. Barrels declined 1.25 cents with 16 loads traded. However, since the significant price increase a few weeks ago and the sharp decline, traders have become extremely bearish. This attitude will be difficult to turn anytime soon. Dry whey was responsible for much of the pressure of this week with price down 3.50 cents with four loads traded.

BUTTER

For the week, butter declined 5.25 cents with six loads traded. Grads A nonfat dry milk increased 1.50 cents with six loads traded. Price moved to the lowest level since Feb. 26 with the decline this week. Buyers were unaggressive waiting for lower prices to pick up supply. They feel no threat of tightening supply or higher prices.

OUTSIDE MARKETS SUMMARY

September corn fell 11 cents, settling at $5.47. August soybeans fell 19.50 cents, ending at $14.1475, with August soybean meal down $3.90 per ton, closing at $352.60. September wheat slipped 1.50 cents, ending at $7.0375. August live cattle declined $0.45, closing at $122.07. September crude oil gained $0.33, ending at $73.95 per barrel. The Dow declined 149 points, closing at 34,935, while the NASDAQ closed 106 points lower, closing at 14,673.

Friday Midday Dairy Market Update - Barrels Slip Again

Block cheese price remained steady for the third consecutive day with no loads traded. The positive aspect was there was an unfilled bid and no offers placed Friday. Barrels slipped 0.25 cent, closing at $1.39 with no loads traded. Barrels seem to be in grater supply with sellers wanting to move it to the market as soon as possible. Barrel price looks as if they want to test the low of last week at $1.3850. Butter price increased 2 cents, closing at $1.6425 with three loads traded. Grade A nonfat dry milk price increased 0.25 cent, ending at $1.2675 with no loads traded. Dry whey also closed at 50.25 with no loads traded. This keeps pressure on Class III futures with October and later contracts posting losses. Class IV futures have not yet traded. Butter futures are 0.50 cent lower to 1.02 cents higher. Dry whey futures are 0.97 cent lower to 1.17 cents higher. USDA will release the June Agricultural Prices report Friday afternoon. This will provide prices used in the calculation of income over feed for the Dairy Margin Coverage program.

Friday Morning Dairy Market Update - Milk Futures Due For a Bounce

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	Steady to 1 Lower

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	3 to 5 Lower
Soybean Futures:	5 to 10 Lower
Soybean Meal Futures:	Mixed
Wheat Futures:	5 to 7 Lower

MILK:

The pressure on Class III futures has been relentless as traders have little hope of price increases anytime soon. Manufacturers have been surprised and a bit concerned that milk supplies have remained as strong as they have so far this summer. Spot milk prices show larger-than-usual discounts for this time of year, indicating plentiful milk supply. Feed supply and prices are widely variable across the country. This may eventually have an impact on milk supply unless crop yields turn out better than expected. Good quality dairy hay is likely to be the feed that may be difficult to find and will command a high price. USDA will release the June Agricultural Prices report on Friday, providing the prices used in calculating income over feed for the Dairy Margin Coverage program.

CHEESE:

The question is whether block cheese holding steady will pull barrel cheese price higher or if the weakness of barrels will pull blocks lower. Prices are at reasonable levels, at which buyers may step up to purchase ahead for upcoming demand. However, the volume of cheese available continues to leave buyers complacent and purchasing supplies as needed.

BUTTER:

There is indication butter exports are strong, but that has not caused concern that supply will tighten anytime soon. Some manufacturers are reducing production by selling cream to manage inventories. Price is expected to grind lower.

Thursday Closing Dairy Market Update - Milk Futures Under Further Pressure

MILK

Milk production is decreasing off farms, but there continues to remain sufficient supply to meet bottling and manufacturing demand. In the Northeast region, balancing plants are full, with cheese plants receiving heavy milk supplies. Without a significant impact on milk production because of the hot weather, drought and high feed prices, there seems to be nothing that will adversely affect milk production in the foreseeable future. Class III futures were hit again Wednesday with selling pressure extending through much of the 2022 contracts. One year ago, cheese prices were crashing after first reaching record highs. Those highs were the result of the Farm to Families Food Box program. There is no such program now, and there is no provision or discussion of any such program. Support for milk prices can only come from the supply and demand of the market, and right now, there is plenty of supply. Demand is strong, but not strong enough to tighten supply.

AVERAGE CLASS III PRICES

3 Month:	$16.46
6 Month:	$16.94
9 Month:	$17.08
12 Month:	$17.18

CHEESE

Barrels are the weaker category of the cheese complex. It is interesting to note that, last week, there were some reports that indicated barrel cheese supply was tighter than the current market indicated. That certainly has not been the case this week as barrels have been unable to find a bottom. Buyers have no interest or need to become aggressive in the spot market. Spot milk in the Midwest is available at prices around $5 under class. This does not make for a market that will tighten anytime soon.

BUTTER

Butter price continues to slide lower as churning seems to be keeping up with demand. Some plants are selling cream rather than churning to limit inventory growth. This adds to the cream supply, keeping buyers and manufacturers sufficiently supplied. Both retail and food service demand are steady with sales near expectations for this time of year. Weekly cold storage in selected surveyed warehouses show inventory remaining virtually unchanged for the month of July.

OUTSIDE MARKETS SUMMARY

September corn closed 0.50 cent higher at $5.4925. August soybeans jumped 13.75 cents, ending at $14.32, with August soybean meal down $2.70 per ton, closing at $356.10 per ton. September wheat jumped 14.25 cents, closing at $6.8875. August live cattle gained $0.15, closing at $123.07. September crude oil gained $0.74, closing at $72.39 per barrel. The Dow declined 128 points, closing at 34,931, while the NASDAQ gained 102 point, ending at 14,763.

Thursday Midday Livestock Market Update - Class III Futures Continue to Erode

Block cheese prices remained unchanged for the second consecutive day. There were no loads traded with only an offer posted a couple of cents above the market. Barrel cheese price declined 0.75 cent, closing at $1.3925 with nine loads traded. The fact that blocks held provided no support to the market. The general belief by the trade is that the weakness of barrels may eventually pull blocks lower. Butter price remained unchanged at $1.6225 with no loads traded. Grade A nonfat dry milk price gained 1.50 cents, closing at $1.2650 with four loads traded. Dry whey price declined 3 cents, closing at 50.25 with two loads traded. The weakness of dry whey added to the bearishness of Class III futures. There is just too much product available to buyers, leaving them purchasing on an as-needed basis without the need to be aggressive. Class III futures are 3 to 27 cents lower with September showing the greatest loss. Class IV futures are 2 to 10 cents higher. Butter futures are 0.42 cent lower to 0.15 cent higher. Dry whey futures are 0.75 to 2.00 cents lower.

Fluid Milk and Cream - Western U.S. Report 30

Milk output is decreasing in California, and component levels are lower. Milk is still     widely available, however, and some contacts report balance between supply and demand.     Bottling sales are lower. Class II and Class III demand is steady. Recent reports indicate     that monsoon rains across the Southwest have helped provide a modicum of drought improvement     to the arid region. The torrential rainfall, however, has also led to instances of dangerous     flash flooding. 

Arizona contacts say milk output has tightened as cow comfort is less than optimal amidst high heat, humidity, and muddy farm conditions. Flooded roads have caused some delays in milk pick ups, but handlers report that milk deliveries are still coming in. Class I orders are ramping up as the school year begins for some educational institutions. Class II demand is flat. 

Milk production in New Mexico is lower and following seasonal patterns. Bottling sales are level. Class III demand is steady to higher. Balancing plants are active, but not stressed, contacts report. 

Heat events and wildfire conditions may have influenced slightly lower than expected production in Washington, but contacts say that milk output in the Pacific Northwest is relatively steady overall. Some handlers anticipate that more hot weather could lead to dips in production, but others expect that cows will maintain current output rates for a while. Class I demand is lower. Class II and III orders are level. 

Farm-level milk production is declining in the mountain states of Idaho, Utah, and     Colorado, but supplies are still ample. Handlers report that spot milk is available in Idaho     at discounts of up to $5.00 to $5.50 under Class III. Bottling orders are level to higher.     Balancing plants are active. 

Contracted condensed skim is steady. Cream is tightening. Contacts report flat demand. Cream supplies are meeting the production needs for butter, cream cheese, and other cream-based dairy manufacturers. Cream multiples are mixed this week, with expansion at both ends of the range.

     Western U.S., F.O.B. Cream
     Multiples Range - All Classes:               1.1200 - 1.3300


     Information for the period July 26 - 30, 2021, issued weekly

     Secondary Sourced Information:

     PACIFIC NORTHWEST MARKET ORDER
Milk delivered to the Pacific Northwest Order 124 totaled 598.3 million pounds in June     2021. Class I utilization was 124.5 million pounds and accounted for 20.81 percent of     producer milk. The uniform price at test was $18.70, down $0.28 from May 2021, but $2.03     above the same month a year ago.

     ARIZONA MARKET ORDER
Milk delivered to the Arizona Order 131 totaled 390.1 million pounds in June 2021. Class I     utilization was 109.2 million pounds and accounted for about 28.0 percent of producer milk.     The uniform price at test was $18.21, up $0.65 from May 2021, and $2.39 above the same     month a year ago.

     MONTHLY MILK PRODUCTION
The NASS Milk Production report noted June 2021 milk production in the 24 major states was     18.1 billion pounds, 3.2 percent higher than a year ago. Milk cows in the 24 selected     states totaled 9.00 million head, 161,000 head more than a year ago. The following table     shows western states included in the report and the monthly milk production changes compared     to a year ago:

     June 2021 Milk Production, (USDA-NASS)

                 (Million Pounds)    % Change From
                                     1 Year Ago

      Arizona         401       -      0.5

      California     3459       +      3.1
      Colorado        444       +      4.7  
      Idaho          1396       +      3.6
      New Mexico      675       +      4.3
      Oregon          220       +      0.5
      Utah            193       +      2.7
      Washington      549       -      2.7

Thursday Morning Dairy Market Update - Milk Futures Unable to Find Support

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Steady to 8 Lower
Butter Futures:	Steady to 1 Lower

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	Mixed
Soybean Futures:	4 to 7 Higher
Soybean Meal Futures:	$2 to $3 Higher
Wheat Futures:	5 to 7 Higher

MILK:

Milk futures continue to make new lows as underlying cash just cannot seem to turn the corner and trend higher. Milk production has been able to remain strong and above year earlier levels through the summer, even in the midst of adverse weather. The desire is to produce milk and lower milk prices and higher feed costs have not impacted that desire for the most part. We are in the business for the long haul and price fluctuations are a part of the business. The longer-term impact of high feed prices may result in higher milk prices over time, but that will depend on whether feed prices remain that way or if there will be sufficient feed in the end, leaving prices near current levels.

CHEESE:

Cheese prices should be low enough to get the interest of buyers to begin to look at purchasing for upcoming demand through the rest of the year. However, with current strong production schedules and readily available supplies, buyers may remain content to purchase on an as-needed basis.

BUTTER:

Butter output is strong and has been able to meet demand as well as build inventory. Inventory generally declines during the second half of the year, but stocks are plentiful to meet any demand that current production is unable to fill. Some plants are selling some cream rather than churning in order to try to limit inventory growth and balance supply with demand. Spot price is expected to remain choppy.

Wednesday Closing Dairy Market Update - Milk Futures Under Further Pressure

MILK

Milk production is decreasing off farms, but there continues to remain sufficient supply to meet bottling and manufacturing demand. In the Northeast region, balancing plants are full, with cheese plants receiving heavy milk supplies. Without a significant impact on milk production because of the hot weather, drought and high feed prices, there seems to be nothing that will adversely affect milk production in the foreseeable future. Class III futures were hit again Wednesday with selling pressure extending through much of the 2022 contracts. One year ago, cheese prices were crashing after first reaching record highs. Those highs were the result of the Farm to Families Food Box program. There is no such program now, and there is no provision or discussion of any such program. Support for milk prices can only come from the supply and demand of the market, and right now, there is plenty of supply. Demand is strong, but not strong enough to tighten supply.

AVERAGE CLASS III PRICES

3 Month:	$16.46
6 Month:	$16.94
9 Month:	$17.08
12 Month:	$17.18

CHEESE

Barrels are the weaker category of the cheese complex. It is interesting to note that, last week, there were some reports that indicated barrel cheese supply was tighter than the current market indicated. That certainly has not been the case this week as barrels have been unable to find a bottom. Buyers have no interest or need to become aggressive in the spot market. Spot milk in the Midwest is available at prices around $5 under class. This does not make for a market that will tighten anytime soon.

BUTTER

Butter price continues to slide lower as churning seems to be keeping up with demand. Some plants are selling cream rather than churning to limit inventory growth. This adds to the cream supply, keeping buyers and manufacturers sufficiently supplied. Both retail and food service demand are steady with sales near expectations for this time of year. Weekly cold storage in selected surveyed warehouses show inventory remaining virtually unchanged for the month of July.

OUTSIDE MARKETS SUMMARY

September corn closed 0.50 cent higher at $5.4925. August soybeans jumped 13.75 cents, ending at $14.32, with August soybean meal down $2.70 per ton, closing at $356.10 per ton. September wheat jumped 14.25 cents, closing at $6.8875. August live cattle gained $0.15, closing at $123.07. September crude oil gained $0.74, closing at $72.39 per barrel. The Dow declined 128 points, closing at 34,931, while the NASDAQ gained 102 points, ending at 14,763.

Tuesday Midday Dairy Market Summary - Weakness Continues

Block cheese price remained unchanged at $1.6350 with no loads traded. In fact, no one showed up to do any business providing no market direction. Barrel cheese price declined 1.50 cents closing at $1.40 also with no loads traded. An offer for a load is what pushed price lower. Butter price declined 1.75 cents closing at $1.6225 with 1 load traded. Price is now back down below block cheese again. Grade A nonfat dry milk price remained unchanged at $1.25 with no loads traded. Dry whey price increased 0.25 cent ending at 53.25 cents with 2 loads traded. Class III futures ae under pressure again despite blocks remaining steady. Contracts are from 2 cents to 23 cents lower with August showing the greatest loss. This does not bode well for the market as anything positive that might indicate some support is not impacting the market. Class IV futures have not yet traded. Butter futures are 0.27 cent to 2.05 cents lower. Dry whey futures are 0.25 cent to 1.40 cents lower.

Wednesday Morning Diary Market Update - Futures Search for Support

OPENING CALLS:

Class III Milk Futures: Mixed

Class IV Milk Futures: Steady to 5 Lower

Butter Futures: Steady to 1 Lower

OUTSIDE MARKET OPENING CALLS:

Corn Futures: 1 to 3 Lower

Soybean Futures: 3 to 5 Lower

Soybean Meal Futures: $1 to $2 Lower

Wheat Futures: 10 to 14 Higher

MILK:

The continued growth of cow numbers will insure sufficient milk supplies for demand. The recent Milk Production report for June showed cow numbers down slightly from May, but that is not yet a trend. We may see more of this if drought conditions persist, and feed becomes very short in supply in some areas. Grain futures have not been in a runaway market, but price will remain higher for the upcoming year. The larger concern for some farmers will be the availability of forage for the year as hay prices in drought areas are already escalating. Overnight trading activity was a bit higher than usual, but it did not move the market much with July, August and September Class III contracts one cent lower with nothing done in Class IV futures.

CHEESE:

Blocks increased Tuesday and barrels bounced back from the lows, but that did not change the attitude of traders. The weakness of barrels solidified the idea that there may be limited upside potential for price. However, the bounce back from the lows generally would have supported futures, but such was not the case.

BUTTER:

Butter futures continue to erode the premiums they contained as traders become a bit more disillusioned with price potential through the rest of the year. Inventory should have begun to decline this month, but it will remain substantially higher than last year. The price spread between butter and cheese is now at only $0.50 with butter at risk of falling below blocks again.

Tuesday Closing Dairy Market Update - Cow Numbers Continue to Increase

MILK

Class III milk futures managed a mixed close. Futures remained under pressure even after blocks increased and barrels bounced back from their lows. Eventually, futures trimmed some of the losses, but that does not mean that traders are turning a bit more friendly to the market. There may have been some feeling that the market is not as bearish as is being portrayed. Cooler weather will be moving into some areas as the week progresses, which should be conducive to better cow comfort. However, cooler weather is not to help crops grow in those areas that continue to lack rainfall. The trade seems to believe the good growing weather in the Eastern Corn Belt and much of the Western Corn Belt is going to make up for the losses in other areas of the country. Yet, grain prices will still be much higher than they were a year ago, but maybe not as high as feared earlier. The biannual cattle inventory report showed dairy cattle inventory as of July 1 at 9.50 million head. This is the highest inventory of dairy cattle on the biannual report since July 1995. Replacement heifers totaled 4.10 million head, up 1,000 head from July 2020. The percentage of heifer to milk cows is 43.2% compared to 42.8% in July 2020.

AVERAGE CLASS III PRICES

3 Month:	$16.60
6 Month:	$17.07
9 Month:	$17.18
12 Month:	$17.26

CHEESE

Cheese prices may be in a precarious position. Traders have become very cautious over buying into the market due to a pattern of short-term price rallies since the beginning of the year. Price increases have been difficult to maintain due to strong cheese production and readily available supplies. Recently, there have been some reports that cheese supplies may be tightening is some areas, primarily for barrels. This does not seem to be widespread. If this is the case, the market shows little concern over it at present.

BUTTER

Price is struggling in part due to the recent inventory report showing stocks 14% above a year ago. Demand will need to be greater than it currently is to work down stocks by the end of the year. Current butter production remains strong with cream supplies tighter but remaining plentiful.

OUTSIDE MARKETS SUMMARY

September corn declined a penny closing at $5.4875. August soybeans gained 5.50 cents, closing at $14.1825, with August soybean meal up $5.20 per ton, closing at $358.80. September wheat declined 2.50 cents, ending at $6.7450. August live cattle declined $0.52, closing at $122.92. September crude oil declined $0.26, closing at $71.65 per barrel. The Dow declined 86 points, closing at 35,059, while the NASDAQ fell 180 points, closing at 14,661.

Dairy Market: Milk output increases 2.9%

U.S. dairy farmers are still putting plenty of milk in the tank but not quite as much as some expected.

The Agriculture Department’s preliminary June estimate was 18.96 billion pounds, up 2.9% from June 2020 and the 13th consecutive month to top output from the previous year. The 24-state total was 18.1 billion pounds, up 3.2%.

Revisions added 5 million pounds to the May 50-state estimate, now put at 19.86 billion pounds, up 4.7% from a year ago, instead of the originally reported 4.6%.

Cow numbers were down 1,000 head from May, the first time in 11 months they didn’t top those a year ago. The herd totaled 9.51 million head in the 50 states, up 153,000 from June 2020 and up 63,000 from January. May cow numbers were revised up 4,000 head.

June output per cow averaged 1,994 pounds, up 26 pounds or 1.3% from 2020.

California milk was up 103 million pounds or 3.1% from a year ago, thanks to a 60-pound gain per cow. Cow numbers mirrored those a year ago. Wisconsin was up 73 million pounds or 2.8%, on a 30-pound gain per cow and 17,000 more cows.

Idaho was up 3.6%, on 14,000 more cows and 30 pounds more per cow. Michigan was up 4%, on 17,000 more cows. Output per cow was unchanged.

Minnesota was up 3.2%, despite a drop of 25 pounds per cow, but the additional 20,000 cows made up the difference. New Mexico was up 4.3%, on a 90-pound gain per cow, but cow numbers were down 1,000 head.

New York produced 3.1% more milk than a year ago, thanks to a 50-pound gain per cow and 4,000 more cows.

Oregon was up 0.5% on 2,000 more cows but output per cow was down 20 pounds. Pennsylvania was down 1.2%, on a drop of 7,000 cows, and output per cow was only up 5 pounds.

South Dakota again had the biggest gain, up 14.7%, on 20,000 more cows, though output per cow was unchanged. Second place went to Indiana, up 8.3%, thanks to 16,000 more cows milked. Output per cow was down 10 pounds. Texas was up 7.0%, inspired by 34,000 more cows and a 25-pound gain per cow.

Washington state had the second largest decline of the five states showing a loss, second only to Virginia and down 2.7%, despite a 35-pound gain per cow. Cow numbers were down 3,000.

StoneX Dairy points out in its July 22 Early Morning Update that solids content is still running strong with fat and protein up 1.3% from last year.

Dairy culling up

Dairy cow culling picked up in June and topped that of a year ago. The USDA’s latest Livestock Slaughter report shows an estimated 237,500 head were sent to slaughter under federal inspection, up 14,100 head from May and 10,500 or 4.6% above June 2020.

Culling in the first half of the year totaled 1.56 million head, down 29,100 or 1.8% from the same period a year ago.

A lot of butter

Growing U.S. butter stocks remain a concern, though the growth slowed some in June. The Agriculture Department’s latest Cold Storage report showed the June 30 butter inventory at a whopping 414.5 million pounds, up 2.6 million pounds or 0.6% from May, which was revised up 10.1 million pounds, and was a weighty 52 million pounds or 14.4% above June 30, 2020.

We’ll learn what June butter output looked like in the next Dairy Products report issued Aug. 4.

American type cheese fell to 809.4 million pounds, down 18.3 million or 2.2% from the May level, which was revised down 3 million pounds from last month’s report, but stocks were up 16.4 million pounds or 2.1% from a year ago.

The “other” cheese category stocks slipped to 603.0 million pounds, down 5.5 million pounds or 0.9% from May, but 4.1 million or 0.7% above a year ago. Revisions reduced the May inventory by 4.3 million pounds.

The total cheese inventory fell to 1.435 billion pounds, down 23.1 million pounds or 1.6% from May, but 19 million pounds or 1.3% above a year ago.

Prices oscillating

CME dairy prices saw ups and downs last week, though perhaps encouraged some by the June Milk Production and Cold Storage reports. The Cheddar blocks fell to $1.5225 per pound last Wednesday, lowest since June 28, but rallied to close Friday at $1.5850, still down 3 cents on the week and 95.50 cents below a year ago.

The barrels fell to $1.3725 last Wednesday, lowest since Aug. 24, 2020, but finished Friday at $1.4025, 3.75 cents lower on the week, $1.0475 below a year ago, and 18.15 cents below the blocks. The week’s trading consisted of 1 car of block and 35 of barrel.

Monday saw the blocks add 4.25 cents and they were up 0.75 cents Tuesday, hitting $1.6350 per pound.

The barrels were up 1.50 cents Monday but rolled 0.25 cents lower Tuesday, to $1.4150, 22 cents below the blocks.

Midwestern cheesemakers told Dairy Market News that market tones were not matching demand and their respective inventory levels and a number say customer interests were strengthening. Barrel producers said they are slightly over-committed and told customers that availability into August would be more limited.

Western retail and food service cheese demand is holding steady, as are exports, thanks to the lower prices. Contacts reported a need to move product quickly, as warehouse space is limited. Delays have led to a stock buildup, thanks to a shortage of truck drivers, limited shipping supplies, and port congestion.

Cash butter saw its Friday finish at $1.6950 per pound, up 1.75 cents, but 3.50 cents below a year ago, with 20 carloads exchanging hands on the week.

Monday’s butter lost 4 cents and proceeded to lose another 1.50 cents Tuesday, slipping to $1.64, lowest CME price since March 1.

July butter sales softened, according to some Midwest producers. June was a better month for food service sales than July, while June and July retail interests were seasonally quiet. Cream was more available last week, according to DMN.

Cream was a little lighter in the West though persistent hauler shortages made availability seem even tighter. Butter production is seasonally active, depending on cream supplies. Some plants reported that production already exceeded 2020 output. Retail sales are steady to slightly higher. Food service demand was also seeing an uptick as fine dining establishments return to normal operation.

Grade A nonfat dry milk fell to $1.23 per pound last Tuesday but closed the week at $1.2525, unchanged on the week, but 26.25 cents above a year ago on 10 sales.

Traders inched the powder up a quarter-cent Monday but backed it down a half-cent Tuesday, to $1.25 per pound.

Dry whey lost a half-cent last Wednesday, gained it back Thursday, and closed Friday at 53.75 cents per pound, 19.75 cents above a year ago, on 3 sales for the week.

The whey gained 0.75 cents Monday and stayed there Tuesday at 53 cents per pound.

Class I down

The August Federal order Class I base milk price is $16.90 per hundredweight, down 52 cents from July, $2.88 below August 2020, and the lowest Class I since April. It equates to $1.45 per gallon, down from $1.70 a year ago.

The eight-month average stands at $16.39, down from $16.42 at this time a year ago and compares to $16.34 in 2019.

From: Capital Press

Tuesday Midday Dairy Market Summary - Cheese Prices Diverge

Block cheese price increased 0.75 cent closing at $1.6350 with 1 load traded. Barrel cheese price slipped 0.25 cent ending at $1.4150 with 2 loads traded. Barrels initially declined 1.50 cents before the first load traded, but then rebounded with the second load traded, setting the closing price. Butter slipped further with price declining 1.50 cents closing at $1.64 with 1 load traded. Grade A nonfat dry milk price declined 0.50 cent ending at $1.25 with one load traded. Dry whey price remained unchanged at 53.0 cents with no loads traded. Class III futures historically would have bounced with the higher block price and a rebound from the lows in barrels, but not in the current market environment. Class III futures are 17 cents lower to 1 cent higher. The gain is only in the nearby July contract as that moves back and forth within a narrow range until expiration. Class IV futures are 16 cents lower. Butter futures are 0.50 cent to 3.50 cents lower. Dry whey futures are 0.15 cent to 0.50 cent higher.

Tuesday Morning Dairy Market Update - Traders Search for Direction

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	Steady to 1 Lower

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	4 to 7 Higher
Soybean Futures:	10 to 15 Higher
Soybean Meal Futures:	$4 to $6 Higher
Wheat Futures:	Mixed

MILK:

Milk futures closed under pressure Monday despite further gains of cheese prices. Traders are convinced the recent increase of cheese prices will be short-lived. Strong milk leaving sufficient milk available for manufacturing and bottling leaves the market with little concern over supply. There have been some, and still are some, adverse weather conditions that may have an impact further down the road but so far have not had any significant impact on milk production. Overnight trade was light in Class III futures with the contracts that did trade remained steady providing no price direction.

CHEESE:

It seems as if buyers of cheese may be more apt to continue to purchase for an extended period of time during this time of year as they begin to look ahead to the end of the year. They would generally begin purchasing to increase ownership of cheese. However, the recent price increase may not bring other buyers in from the sidelines, resulting in lower prices again once current buying interest is satisfied. There is currently no concern over any tightness of supply.

BUTTER:

The weakness of butter is not a good sign as food service demand is strong and exports are running substantially higher than last year. Production has been steady with cream available. This has been able to meet demand as well as increase inventory. Supplies are plentiful leaving buyers purchasing on an as-needed basis.

Monday Closing Dairy Market Update - Milk Futures Lower

MILK:

Class III milk futures just could not find any support even though cheese prices increased Monday. The feeling of traders is that cheese prices may increase for a short period of time before falling back again. That has been the pattern since the beginning of the year. Traders thought that pattern had been broken about three weeks ago when cheese prices moved higher for over the period of a week. However, cheese prices came crashing down. Now the increase of cheese over the past three days is being met with skepticism. As long as milk production remains strong and cheese plants continue to run at or near capacity, prices may have limited upside potential. Class IV futures took a beating aw well today due to the decline of butter price. This decline moved butter price down to the lowest level is has been since March 22. This does not paint a very good picture for Class IV milk prices.

AVERAGE CLASS III PRICES:

3 Month:	$16.63
6 Month:	$17.12
9 Month:	$17.23
12 Month:	$17.30

CHEESE:

Buying interest in cheese has been able to move prices higher again. Buyers are looking ahead to upcoming demand and are taking advantage of these prices. The extent of their willingness to purchase is anyone's guess. Traders may not be too excited about getting into the market on the long side this time due to what happened the last time prices increased. Demand is good, but it does appear to be good enough to provide any indication of the potential for tighter cheese supply.

BUTTER:

Price broke through support at the previous low from July 9 and also the low from March 22. This put price at the lowest level since March 1. The trend remains down with no indication of a change in that trend. With inventory remaining 14% a year ago, there is little hope of a sustained price rally to take the market back up to $1.90. Churns remain active with sufficient cream available for butter production.

OUTSIDE MARKETS SUMMARY:

September corn 2.50 cents, closing at6 $5.4975. August soybeans gained 11.75 cents, ending at $14.1275, with August soybean meal unchanged at $353.60 per ton. September wheat declined 7 cents, closing at $6.77. August live cattle jumped $1.95, ending at $123.45. September crude oil declined $0.16, closing at $71.91 per barrel. The Dow gained 83 points, closing at 35,144, while the NASDAQ gained 4 points, closing at 14,841 points.

Monday Midday Dairy Market Summary - Cheese Prices Gain

Block cheese price increased 4.25 cents closing at $1.6275 with 2 loads traded. There were 2 unfilled bids with no offers remaining at the close. Barrel cheese price gained 1.50 cents closing at $1.4175 with 5 loads traded. There was an unfilled bid and uncovered offer remaining at the close. The strength of cheese did nothing to support Class III futures. With only August posting a slight gain of 5 cents. The rest of the contracts that have traded range from 4 cents to 25 cents lower. Traders just are not interested in buying futures in anticipation of higher prices. The recent increase and quick decline have left a bad taste in their mouths that will take a lot to overcome. It is unclear whether the current increase of cheese prices will have the necessary components of a stronger trend higher. Butter price declined 4 cents closing at $1.6550 with one load traded. Grade A nonfat dry milk price gained 0.25 cent ending at $1.2550 with one load traded. Dry whey price declined 0.75 cent closing at 53.0 cents with no loads traded. Class IV futures have not yet traded. Butter futures are steady to 3 cents lower. Dry whey futures are 0.15 cent to 0.30 cent higher.

Monday Morning Dairy Market Update - Slow Start to the Week

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	4 to 7 Lower
Soybean Futures:	10 to 14 Lower
Soybean Meal Futures:	$3 to $4 Lower
Wheat Futures:	10 to 12 Lower

MILK:

With the major dairy reports behind us again, there is little for traders to look at besides the daily spot trading periods. Weather is always watched as far as planning for the activities of the day as well as what impact it could have on local as well as U.S. milk production. However, weather does not have an immediate impact on milk prices. That impact is one of a longer-term duration. Currently, milk production is higher than a year ago and cheese inventory is lower. That makes for somewhat of a neutral market. It will be up to demand and the need of buyers to purchase product in preparation for upcoming demand.

CHEESE:

Cheese moved higher on Thursday and Friday, but traders did not get excited about the gains. Price increases have been short-lived. The most recent gain a few weeks ago was the largest and longest gain so far this year, but that came crashing down quickly once buying was finished. Traders do not want to get too excited about another price increase. Even if cheese prices increase again Monday, the impact may be minimal to milk futures.

BUTTER:

Price seems to be carving out a sideways trading pattern with the possibility that support may have been uncovered. The overall downtrend has not yet been broken. Supply and demand seem to be balanced, which leaves the market choppy. The recent Cold Storage report showed inventory 14% above a year ago, which may limit upside price potential through the second half of the year.

 

Friday Closing Dairy Market Update - Dairy Cattle Slaughter Increased

MILK:

Milk futures closed lower for the week as bearishness gripped the market due to weakness of underlying cash. On top of that was the added bearishness of traders as price strength is being met with pessimism. The higher cheese prices Friday should have moved Class III futures higher than what they were, but for the fact that traders are not convinced of an extended duration of price strength. The spot market will require extra effort to change the current attitude of traders. Corn futures had a negative week, closing lower than they were at the end of last week. That may also have some underlying influence on the market. The milk production report showed cow numbers in the month of June declined by 1,000 head from the previous month. The June Livestock Slaughter report showed slaughter increasing 14,100 head from May totaling 237,500 head. There were a lot of replacements moving into the herds, taking the spots of those that were culled. June slaughter was 10,500 head more than June 2020.

AVERAGE CLASS III PRICES:

3 Month:	$16.66
6 Month:	$17.22
9 Month:	$17.31
12 Month:	$17.36

CHEESE:

At least cheese prices did not close as bad as it could have been. Blocks posted stronger prices the past two days while barrels moved higher Friday. The availability of milk for manufacturing continues to keep spot milk prices lower than usual for this time of year. Milk production continues to exceed the previous year and is expected to continue to do so for the rest of the year. For the week, blocks declined 3 cents with only one load traded. Barrels declined 3.75 cents with 35 loads traded. A report earlier in the week suggested barrel supply was tightening, but you would not think that is the case with this much activity. It indicates barrel supply is adequate to slightly heavy. Dry whey remained unchanged for the week with three loads traded.

BUTTER:

Price tried to hold for the week, but slipped Thursday. The Cold Storage report indicated a limited increase of inventory in June, but inventory being 14% above a year ago does not make for a bullish market. Generally, inventory should decrease during the second half of the year. For the week, butter gained 3.50 cents with 20 loads traded. Grade A nonfat dry milk was unchanged with 10 loads traded.

OUTSIDE MARKETS SUMMARY:

September corn fell 17.25 cents, closing at $5.4725. August soybeans fell 15.25 cents, closing at $14.01 with August soybean meal down $9.60 per ton, closing at $353.60 per ton. September wheat declined 8.25 cents, closing at $6.84. August live cattle gained $0.70, ending at $121.50. September crude oil increased $0.16, closing at $72.07 per barrel. The DOW gained 238 points, closing at 35,062 while the NASDAQ gained 152 points, closing at 14,837.

Friday Midday Dairy Market Update - Cheese Posts Gains

Block cheese price increased 4.25 cents, closing at $1.5850 with no loads traded. There were two unfilled bids remaining in the market at the close with no offers. The market is now running the other way as buyer are more aggressive while sellers have stepped back, waiting to see how high they will push it. Barrels were not quite in the same posture as there was a large amount of business being done; yet price was able to move higher. Barrels gained 3 cents, closing at $1.4025 with 15 loads traded. There were three unfilled bids and one uncovered offer remaining at the close. Class III futures are higher, but gains are being made under a cautious market environment. Traders feel the upside still may be limited and they do not want to be caught with futures contracts they purchased if the market falls back again. Futures are 3 cents lower to 17 cents higher. Butter price remained unchanged at $1.6950 with no loads traded. Grade A nonfat dry milk gained 0.75 cent, closing at $1.2525 with one load traded. Dry whey remained unchanged at 53.75 with no loads traded. Class IV futures have not yet traded. Butter futures are 3.00 to 3.50 cents lower. Dry whey futures have not yet traded.

Friday Morning Dairy Market Update - Traders Cautious Ahead of Cash

OPENING CALLS:

Class III Milk Futures:	Steady to 10 Higher
Class IV Milk Futures:	5 to 10 Lower
Butter Futures:	1 to 2 Lower

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	2 to 4 Lower
Soybean Futures:	8 to 12 Lower
Soybean Meal Futures:	$3 to $5 Lower
Wheat Futures:	Mixed

MILK:

Milk production in June up 2.9% was a bit shy of the estimate, which should be somewhat friendly to the market. Cold storage was friendly as cheese stocks showed a decline, even though there were some earlier reports indicating inventory was increasing. This may not provide a lot of support as these reports generally are not market-movers. Spot trading will provide direction. Even though milk production was not as high as anticipated, there remains a lot of milk in the country, easily satisfying the needs of bottlers and manufacturers. Milk futures will have a difficult time regaining what was recently lost unless fundamentals change in the near future.

CHEESE:

The decrease of cheese inventory on the Cold Storage report should be positive to the market, even though it is not unusual for that to happen during June. However, high cheese production due to increased milk production indicates strong demand. This could play a significant part in price potential through the end of the year.

BUTTER:

Butter inventory increased, but the increase was slight. The bearish aspect of the Cold Storage report was that butter stocks are 14% above a year ago. Inventory should begin to decline, but that may be at a slower pace than usual as well. There could be further pressure on cash Friday during spot trading.

Thursday Closing Dairy Market Update - June Milk Production Increased 2.9%

MILK:

Class III milk futures were able to close with double-digit gains in some contracts. This certainly was a welcomed sight after the recent weakness. Milk production in the top 24 states in June was up 3.2% from June 2020 according to the report released by USDA Thursday. Milk output totaled 18.1 billion pounds. Milk production per cow averaged 2,011 pounds which was 27 pounds more than a year ago. Cow numbers totaled 9.0 million head, down 1,000 head from May, but up 161,000 head from a year ago. Total milk production in the country increased 2.9% from June 2020, reaching 18.955 billion pounds. Production per cow increase 26 pounds at 1,994 pounds. Cow numbers declined 1,000 head to 9.508 million which was 153,000 more than a year ago. Second quarter milk production was 3.7% above the same period last year.

AVERAGE CLASS III PRICES:

3 Month:	$16.59
6 Month:	$17.16
9 Month:	$17.27
12 Month:	$17.33

CHEESE:

American cheese inventory took a surprising dip in June with a decline of 18.3 million pounds to a total of 809.4 billion pounds. It is not unusual for inventory to decline from May to June as it has decreased about as much as it has increased over the years. It was a bit surprising inventory was lower based on what reports indicated during June. Inventory still remained 2% higher than the previous year. Swiss cheese stocks increased 655,000 pounds, totaling 22.5 million pounds. This is 6% below a year ago. Other cheese stocks declined 5.5 million pounds from May totaling 603 million pound and 1% above a year ago. This put total cheese stocks at 1.435 billion pounds, down 23.1 million pounds from May, but 1% higher than a year ago.

BUTTER:

June butter inventory grew 2.6 million pounds, totaling 414.5 billion pounds. This was a minor increase which should be positive to the market, indicating continued strong demand. However, the bearish aspect was that stocks are 14% above June 2020. This may limit price potential unless demand increased significantly and supply declines.

OUTSIDE MARKETS SUMMARY:

September corn declined 7.25 cents, closing at $5.6450. August soybeans fell 23 cents, closing at $14.16 with August soybean meal down $6.60 per ton, closing at $363.20. September wheat fell 18.50 cents, closing at $6.9225. August live cattle gained $0.75, closing at $120.80. September crude oil jumped $1.61, closing at $71.91 per barrel. The DOW increased 25 points while the NASDAQ gained 53 points.

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June Milk Production up 3.2 Percent

June Milk Production up 3.2 Percent 

Milk production in the 24 major States during June totaled 18.1 billion pounds, up 3.2 percent from June 2020. May revised production, at 19.0 billion pounds, was up 4.9 percent from May 2020. The May revision represented an increase of 12 million pounds or 0.1 percent from last month's preliminary production estimate. 

Production per cow in the 24 major States averaged 2,011 pounds for June, 27 pounds above June 2020. 

The number of milk cows on farms in the 24 major States was 9.00 million head, 161,000 head more than June 2020, but 1,000 head less than May 2021. 

April-June Milk Production up 3.7 Percent 

Milk production in the United States during the April - June quarter totaled 58.1 billion pounds, up 3.7 percent from the April - June quarter last year. 

The average number of milk cows in the United States during the quarter was 9.51 million head, 47,000 head more than the January - March quarter, and 141,000 head more than the same period last year.

More: 

NASS	Milk Production

Fluid Milk and Cream - Western U.S. Report 29

California milk production is following seasonal patterns and declining. Contacts say milk     supplies are in good balance with dairy manufacturing demands. Bottling orders are lower.     Class II sales are steady to stronger. 

Farm-level milk production is decreasing in Arizona. Some K-12 institutions are beginning the new school year this month, and Class I demand is picking up as that pipeline refills. Class II and III orders are level. 

Milk flows are declining in New Mexico. Bottling sales are flat. Balancing plants are active, and Class III demand is steady. 

In the Pacific Northwest, milk production is decreasing. While the heat-related drops have been greater than expected in parts of Washington, milk supply is in good correlation with demand overall. Although potential drops in milk production due to future high temperatures have been the topic of discussion for some handlers, contacts say current output levels are expected to hold for a while. Class I orders are lower. Class II and III demand are steady. 

Milk is widely available throughout the mountain states of Idaho, Utah, and Colorado. Some contacts report spot loads in Idaho at discounts of up to $5.00 to $5.50 under Class III. Bottling sales are higher. Balancing is heavy, and some market participants note that Class III demand is stronger than they usually see this time of year. 

Condensed skim contracts are steady. Cream is tighter, but flattening demand is helping to keep     pressure from building in the market. Butter and cream cheese production are steady. Cream     multiples at the top of the range decreased this week.

     Western U.S., F.O.B. Cream
     Multiples Range - All Classes:               1.1500 - 1.2800


     Information for the period July 19 - 23, 2021, issued weekly

     Secondary Sourced Information:

     CALIFORNIA MARKET ORDER
Milk pooled on the California Order 51 totaled 1.929 billion pounds in June 2021. Class I     utilization was 369.2 million pounds and accounted for about 19.1 percent of producer milk.     The uniform price was $17.30, up $0.57 from May 2021, and $4.17 above the same month a year     ago.

Thursday Midday Dairy Market Summary - Cheese Price Finally Holds

Block cheese price increased 2 cents, closing at $1.5325 with no loads traded. This is a bit strange as sellers have been the aggressors for more than a week with buyers nowhere to be found on some days. Thursday, however, there was a seller, but at a higher price with no interest to offer lower. Barrel cheese price remained unchanged at $1.3725 with six loads traded. Price initially moved 0.75 cent higher before selling brought the price back down to unchanged. Butter price declined 3.25 cents, closing at $1.69 with nine loads traded. Grade A nonfat dry milk price increased 0.75 cent, closing at $1.2450 with three loads traded. Dry whey price increased 0.50 cent, ending at 53.75 with no loads traded. Class III futures are 8 cents lower to 25 cents higher with August showing the greatest strength. Class IV futures are 10 cents higher. Butter futures are 2.75 cents lower to 0.25 cent higher. Dry whey futures are 0.15 to 1.37 cents lower. USDA will release the June Milk Production report Thursday. I estimate milk production to be 3.6% above June 2020 with 2,000 more head of cows than May. The June Cold Storage and Livestock Slaughter reports will also be released Thursday.

Thursday Morning Dairy Market Update - Major Reports Released Today

OPENING CALLS:

Class III Milk Futures:	Steady to 5 Lower
Class IV Milk Futures:	Mixed
Butter Futures:	Steady to 1 Higher

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	10 to 14 Lower
Soybean Futures:	18 to 25 Lower
Soybean Meal Futures:	$3 to $5 Lower
Wheat Futures:	12 to 18 Lower

MILK:

Milk futures were under pressure Wednesday with overnight trade pointing to lower prices again Thursday. Cheese prices seem to be in a free fall with buyers showing little interest in purchasing. One would think lower prices would stimulate the interest of buyers for upcoming demand later in the year. However, milk production remains strong, keeping bottlers and manufacturers well supplied. This leaves a readily available supply for the market. Farms are not slowing down milk production, as will be seen on the June Milk Production report Thursday. I estimate milk production to be up 3.8% from a year ago with cow numbers up 2,000 head from May. The June Livestock Slaughter report will also be released which should continue to show reduced dairy cattle slaughter numbers.

CHEESE:

There seems to be no support under cheese prices. After the period of strength about three weeks ago, the weakness has increased in intensity. The last time barrel price was this low was when price began the large rally in August last year. A similar rally will not happen this year due to very different market fundamentals.

BUTTER:

Price has been able to hold its own much better than cheese. The price gap between butter and cheese continues to widen after spending some time close together. The supply of butter is more in line with demand. The June Cold Storage report will be released Thursday with inventory expected to show an increase; but the increase might be lighter than usual.

Wednesday Closing Dairy Market Update - August Class I Price Is $16.90

MILK:

Milk supply is plentiful for processing needs, which is being reflected in milk futures contracts. Milk futures are reacting to the weakness of cheese due to plants still running at full or nearly full capacity. This leaves buyers unaggressive in the spot markets. The demand from bottlers is relatively stable as usual for the summer in most areas while a few areas such as Florida are seeing a little uptick in demand for Class I milk. The Class I price for August was announced at $16.90, down $0.52 from July and down $2.88 from August 2020. USDA will be releasing a plethora of reports Thursday. They will released the June Milk Production, Cold Storage and Livestock Slaughter reports. I estimate milk production to be up 3.8% from a year ago. The production increase will be strong due to more dry cows last year during the month as cows were dried off earlier in order to reduce production on farms as plants urged production cuts. I estimate cow number to be up 2,000 head from last month.

AVERAGE CLASS III PRICES:

3 Month:	$16.45
6 Month:	$17.04
9 Month:	$17.17
12 Month:	$17.26

CHEESE:

It is interesting that USDA's Dairy Market News reports that some cheese manufacturers suggest the current spot market does not seem to reflect demand and inventory levels in the Midwestern region. This indication is that demand for certain varieties is very strong. Barrel supply have been overcommitted in some cases with those plants telling customers that supply may be a bit tighter through the end of summer. However, the spot market is generally a good barometer for reflecting supply and demand. Thus, some of these reports may be location specific.

BUTTER:

Some plants are selling cream rather than churning in order to balance inventory. Overall, cream supply is readily available making the selling of cream a bit more challenging and not quite as lucrative as most other years at this time. The cold storage report is expected to show some increase of inventory, but the gain may be minimal.

OUTSIDE MARKETS SUMMARY:

September corn closed, unchanged at $5.7175. August soybeans declined 4.25 cents, ending at $14.3925, with August soybean meal up $4.30 per ton, closing at $369.80. September wheat gained 10.25 cents, ending at $7.1075. August live cattle gained $0.27, closing at $120.05. September crude oil jumped $3.10 per barrel, closing at $70.30. The Dow gained 286 points, closing at 34,798, while the NASDAQ gained 133 points, ending at 14,632.