MILK:
The August Class III contract has now joined September through December above $18.00. There remains underlying concern as to the duration of price increases we may see, but for now the trend is up and it is greatly improving the attitude of farmers, especially in light of high grain prices. Milk production continues to remain strong, but is not overwhelming the market or processors. Milk output remains stronger than some had anticipated during this time of year. The periods of hot weather have not affected milk output as much as anticipated. High feed prices have not affected milk production as much as anticipated either. Some farms have had to exit the business due to the inability to cash flow. This has not and will not have an impact due to those cows being replaced by other cows on other operations. Cow numbers continue to increase along with production per cow. It will take something major to change that trend. However, the pattern will always repeat themselves and eventually we will see milk production falter for a time and dip below the previous year. It cannot go up forever.
AVERAGE CLASS III PRICES:
| 3 Month: | $17.76 |
| 6 Month: | $18.16 |
| 9 Month: | $18.04 |
| 12 Month: | $17.97 |
CHEESE:
Cheese continues to increase with blocks not very far from the level it had been in early May before the market came under substantial pressure, resulting in a large price decline. Block price is only about 5 cents shy of reaching back to that level. The surprise here is that cheese is readily available to the market, which should keep buyer less aggressive, but certainly in not the case at the present time. Prices might actually increase further than anyone would have anticipated a few weeks ago.
BUTTER:
Current fundamentals would suggest price will remain in a somewhat sideways pattern for the foreseeable future. There is potential for the market to tighten in time as cream supply is beginning to tighten, which may reduce butter production. However, with inventory higher than a year ago, the effects will be slow or non-existent.
OUTSIDE MARKETS SUMMARY:
July corn gained 7.75 cents, closing at $6.77. July soybeans gained 5.50 cents, closing at $14.38 with July soybean meal gaining $0.20, closing at $355.10 per ton. July wheat lost 6.25 cents, ending at $6.28.75. August live cattle gained $1.92, closing at $121.75. August crude oil gained $1.15, closing at $72.25 per barrel. The Dow declined 107 points, closing at 34,889, while 56 points closing at 14,678.
