MILK:
It has been hot and dry in the western region with Dairy Market News indicating that milk is still widely available for needs. The report is the milk production is declining seasonally. Cheese demand is strong which keeps milk flowing to cheese production. Class I demand is slower due to lower demand for bottling. It is also reported that the wildfires out there have not impacted dairy farms. The central region is following a similar pattern as milk output slows seasonally. However, milk supply is plentiful with little concern over supply tightness. This continues to result in significant discounts for spot milk as plants continue to sell excess milk. Even though the fundamentals did not support the recent price rally, it was not expected to end so abruptly. The large drop of cheese prices today sent Class III futures plummeting. August and September contracts were locked limit down after spot trading and for the rest of the day. Weakness may follow through in overnight trade as some traders will want to exit positions. The Federal Orders were finally able to show some positive Producer Price Differentials (PPD). It has been over a year since we have seen positive PPD's. I looked at a few Federal Orders to get a sampling of PPD's for June. Central Order 32 showed a PPD of +$0.23. The Northeast Order 1 was +$1.29. The Midwest Order 33 showed +$0.60. The Southwest Order 126 had a PPD of +$0.84. Federal order 30 for the Upper Midwest had a +$0.17 PPD.
AVERAGE CLASS III PRICES:
| 3 Month: | $17.01 |
| 6 Month: | $17.49 |
| 9 Month: | $17.55 |
| 12 Month: | $17.59 |
CHEESE:
The weakness of cheese prices was anticipated at some point, but the large decline Thursday was not expected. Again, the market always falls faster than it increases. The concern is that it fell on light selling interest. The weakness Wednesday sent buyers to the sidelines again as they waited to see just how aggressive sellers would be. Sellers were unable to take advantage of the higher prices over the past one week and a half, as lower offers could not entice buyers.
BUTTER:
Price remains in the middle of the block and barrel cheese prices, but it continues to trend lower. Cream supply remains sufficient for butter production, but supply is not as plentiful as it had been. Supply is able to keep demand satisfied with little difficulty. Inventory continues to remain above a year ago. However, inventory should begin to decline during the second half of the year.
OUTSIDE MARKETS SUMMARY:
September corn declined 4 cents, ending at $5.6425. August soybean declined 5.50 cents, closing at $14.4750 with August soybean meal down $6.00 per ton, closing at $362.70. September wheat jumped 17.75 cents, closing at $6.72. August live cattle slipped $0.12, closing at $121.12. August crude oil fell $1.48, ending at $71.65 per barrel. The Dow gained 54 points closing at 34,987, while the NASDAQ fell 101 points, closing at 14,543.
