Friday Closing Dairy Market Update - Milk Futures Eliminate Gains in 3 Days

MILK:

Milk futures put in a wild week with early strength giving way to substantial weakness. Futures closed substantially lower Friday than they were a week ago. The price gains of the past 1 1/2 weeks were eliminated over the past three days. The market always falls faster than it increases. So why did futures increase as much as they had? The likely reason is the pattern that takes place most often when underlying cash rises or falls. In this case, cheese prices increased, bringing more buyers into the spot market as they wanted to purchase cheese before prices move too high. Fundamentals did not support it, but the fear of having to purchase cheese at higher prices later to fill demand prompted them to step in and be more aggressive. Once that buying ran out, no one was interested in purchasing at higher prices. A void had developed under the market. The market now has corrected in line with underlying cash, leaving much frustration in its wake. U.S. City Average Retail prices for June showed whole milk price averaging $3.56 per gallon. This is $0.38 per gallon higher than a year ago and $0.06 per gallon higher than May.

Average Class III Prices:

3 Month:	$16.93
6 Month:	$17.47
9 Month:	$17.52
12 Month:	$17.56

CHEESE:

For the week, blocks fell 11 cents with seven loads traded. Barrels declined 14 cents with 27 loads traded. This compares to the previous week when blocks increased 17 cents with barrels gaining 8 cents. That is why barrels have fallen below the previous low and moved back to a price last seen on March 24. Dry whey price gained 3 cents this week with five loads traded. The U.S. City Average Retail price for natural cheese in June was $5.39 per pound.

BUTTER:

For the week, butter gained 0.25 cent with 15 loads traded. Grade A nonfat dry milk also gained 0.25 cent with 13 loads traded. Price continues to struggle as supply and demand are fairly balanced. Retail demand has slowed seasonally and has slowed as demand from the food service industry has increased.

OUTSIDE MARKETS SUMMARY:

September corn declined 8.25 cents, closing at $5.56. August soybeans gained 7.25 cents, closing at $14.5475 with August soybean meal up $0.50 per ton, closing at $363.20. September wheat jumped 20.50 cents, ending at $6.9250. August live cattle declined $0.95, closing at $120.17. August crude oil gained $0.16 per barrel, closing at $71.81. The DOW fell 299 points, closing at 34,688 while the NASDAQ fell 116 points, closing at 14,427.