MILK:
At least some Class III contracts were able to close higher in the face of further negativity. What is lacking is strong demand that will utilize current higher milk production and inventory of dairy products. Until that happens, milk prices will remain in the current range or possibly lower. The concern is that if prices cannot rally any more than currently as we move through the time when buyers are generally more aggressive, what is going to happen once end of the year demand is filled? There is some hope increased government purchases of dairy products for food programs during the final quarter of the year, might be able to provide some support to the market. Whether that will be sufficient to utilize the extra milk being produced this year is yet to be seen. The increase of money to be provided through the Supplemental Nutrition Assistance Program may be used for any approved foodstuffs and not necessarily just dairy. But anything that could improve demand will be welcomed. Tuesday is the last day to trade August dairy futures and options.
AVERAGE CLASS III PRICES:
| 3 Month: | $16.43 |
| 6 Month: | $16.79 |
| 9 Month: | $16.96 |
| 12 Month: | $17.08 |
CHEESE:
Block price is solidly back into the range it has been in much of the year so far. Current fundamentals suggest price might remain that way for a period of time or maybe even the rest of the year. If there will be any hope for price to trend higher, supply will need to tighten. It may not take much, but it will need to cause buyers to become more aggressive as they prepare for end of the year demand.
BUTTER:
A slight slowing of butter production as some plants are selling cream rather than churning with the intent to limit inventory build along with continued strong exports, may be enough to keep a higher trend developing. Futures contracts do not have much premium built into them through the rest of this year. Traders are not convinced there is much upside unless they will be proven otherwise.
OUTSIDE MARKETS SUMMARY:
September corn fell 17.75 cents, closing at $5.4025. September soybeans fell 54.50 cents, ending at $13.0475 with September soybean meal down $6.60, ending at $347.60 per ton. September wheat declined 9.75 cents, closing at $7.0875. October live cattle declined $0.80, closing at $128.32. October crude oil gained $0.47, closing at $69.21 per barrel. The DOW declined 56 points, closing at 35,400 while the NASDAQ gained 136 points, closing at 15,266.
