MILK:
Milk futures closed lower in all contracts as pressure resulted from the decline of all categories in the spot market. Class IV contracts fell in line with butter and nonfat dry milk prices. However, Class III futures held well despite the large decline of cheese prices. The calculation of the Class III based on underlying spot prices of cheese and dry whey price reduced the Class III price $1.14 per cwt just with Thursday's weakness. Yet, futures were unchanged to 35 cents lower and were not really a reflection of the weakness in the spot market. Traders are in a quandary over price strength or weakness. They want to remain optimistic due to lower milk output and lower cow numbers, but the potential impact of inflation and a possible recession may have a large impact on overall demand. The food service industry is being impacted with some slowing of demand taking place. Retail demand is reported as mixed depending on the area of the country. Spot milk prices in the Central Region are reported as much as $5.00 under class as steady milk production is providing plants with sufficient supply.
AVERAGE CLASS III PRICES:
| 3 Month: | $24.05 |
| 6 Month: | $23.92 |
| 9 Month: | $23.39 |
| 12 Month: | $22.85 |
CHEESE:
Dairy Market News reports cheese sales in the west are trending lower at the retail level. Consumers are showing some resistance to higher prices in the grocery store. This is not limited just to dairy, but all food items. Restaurants in the western region are trimming some of their hours of operation as traffic is reduced. This is not positive for the outlook of prices as the year progresses. Buyers have already purchased some product ahead time to avoid supply difficulties later in the year. That may not have been necessary if the economy does not change soon. The decline of blocks Thursday was the largest one-day decline since Nov. 17, 2020.
BUTTER:
Butter production has slowed somewhat as cream supply has tightened in some regions.
Other areas have extra cream available but are having difficulty moving it to where it is needed due to the lack of trucks and truck drivers. This is not changing with projections over the next few years of this potentially getting worse. Weekly cold storage in selected storage centers surveyed each week showed a decrease of 5 million pounds over the first half of the month. This would be seasonal and not necessarily bullish for the market.
OUTSIDE MARKETS SUMMARY:
July corn jumped 14.25 cents, closing at $7.8825. July soybeans gained $15.75 cents, closing at $17.0950 with July soybean meal up $12.20 per ton, closing at $429.70 per ton. July wheat jumped 28.25 cents, closing at $10.7825. June live cattle closed $0.20 higher, ending at $137.75. July crude oil gained $2.28, closing at $117.59 per barrel. The DOW fell 741 points, closing at 29,927 while the NASDAQ fell 453 points, ending at 10,646.
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