MILK
The market digested the milk production report earlier this week without too much fanfare. However, the cold storage report created much anxiety for the market as traders that had been holding out hope for higher prices, threw in the towel. Lower milk production than a year ago has not had much impact on reducing the supply of cheese available to the market. It was positive that milk production decreased from a year ago or inventory might have been quite a bit higher. However, if milk production would be higher, it would likely mean that cost of production would be lower, and demand might be higher due to lower inflation. This is difficult to quantify, but a strong possibility. It is not a good thing to see farms continue to exit the dairy business. The Global Dairy Trade auction took place earlier this week and showed the trade weighted average down 1.3%. There were 149 participants with a total of 20,760 metric tons sold. Anhydrous milk fat price declined 4.7% to $5,913 per metric ton or $2.68 per pound. Butter increased 2.4% to $6,213 per metric ton or $2.82 per pound. Cheddar cheese price declined 9.0% to $4,875 per metric ton or $2.21 per pound. Skim milk powder increased 1.0% to $4,276 per metric ton or $1.94 per pound. Skim milk powder slipped 0.6% to $1,125 per metric ton or $1.87 per pound. Buttermilk powder was not offered with no price posted for lactose or sweet whey powder.
AVERAGE CLASS III PRICES
| 3 Month: | $23.54 |
| 6 Month: | $23.52 |
| 9 Month: | $23.04 |
| 12 Month: | $22.50 |
CHEESE
For the week, blocks declined 5.25 cents with 3 loads traded. Barrels declined a penny with one load traded. Dry whey declined 1.25 cents with 14 loads traded. The heavier activity of dry whey is somewhat surprising as it generally has less activity than cheese over the course of a week. Whey may see further downside movement if demand pulls back due to inflation.
BUTTER
For the week, butter declined 2.50 cents with 17 loads traded. Grade A nonfat dry milk declined a penny with 7 loads traded. The cold storage report yesterday was not necessarily bearish for butter but a neutral report along with further weakness of cash does not bode well for resuming a trend higher anytime soon.
OUTSIDE MARKETS SUMMARY
July corn gained 3.50 cents closing at $7.5025. July soybeans gained 17.50 closing at $16.1075 with July soybean meal up $5.90 per ton closing at $432.60. July wheat declined 13.50 cents closing at $9.2375. June live cattle gained $0.10 ending at $135.35. August crude oil gained $2.83 ending at $107.10 per barrel. The DOW jumped 823 points closing at 31,501 while the NASDAQ gained 375 points closing at 11,608.
