MILK
Milk futures showed significant losses with Class IV futures outpacing the declines of Class III. Two days of price weakness in butter turned traders a little more negative. There is a rising fear over the impact of rampant inflation on dairy demand. The economy is not in a recession, but there are those who believe the only way out the current inflationary period is through a recession. The last recession took place in 2020 as a result of COVID, and it was a brief recession as the economy shut down for a few months. The earlier recession took place from December 2007 through June 2009 and was called the Great Recession. During that time, milk prices fell, only rebounding a short time before the recession was officially over. This is not to say the same will take place again, but it does give an indication that what happened then could be repeated. Escalating fuel and food prices may begin to affect demand.
AVERAGE CLASS III PRICES
| 3 Month: | $24.41 |
| 6 Month: | $24.31 |
| 9 Month: | $23.77 |
| 12 Month: | $23.21 |
CHEESE
Further decline of cheese prices has eroded the optimism that has been held in the market. Traders that had been holding bought positions are liquidating some of those positions. There remains some hope that lower price will spur aggressive buying. However, buyers may not be too anxious to purchase much more ahead of time due to the uncertainty of demand during the second half of the year.
BUTTER
Butter has now declined two days, retreating from $3. It is not certain the rally is over, but it does increase the concern that price resistance has been reached. Food prices continue to increase, making it more difficult to stretch the dollar. Consumers will pull back on some food items more than others, but many areas will see lower demand as people change their eating habits. Buyers have been purchasing butter quite a bit ahead of time to make sure they have sufficient on hand for later demand. Now, they may not need to purchase as much.
OUTSIDE MARKETS SUMMARY
July corn declined 4 cents, closing at $7.6825. July soybeans fell 38 cents, closing at $17.0750, with July soybean meal down $14, closing at $415.10 per ton. July wheat gained 0.25 cent, ending at $10.71. June live cattle fell $2.20, closing at $134. July crude oil gained $0.11, ending at $120.78 per barrel. The Dow fell 876 points, closing at 30,517, while the NASDAQ fell 531 points, closing at 10,809.
