MILK
Class III futures are holding a premium to the underlying cash calculation as traders anticipate prices will work higher as the summer progresses. More milk is available to manufacturers now that schools are closed. This will mean more production of dairy products to meet demand. Milk production is not slowing down but is holding at the high levels of the spring flush. Production remains below a year ago and is expected to remain that way as expansions are very limited and heifer supplies are tight. Cows are moving from one farm to the next which is leaving the overall cow number steady but lower than a year ago. The Global Dairy Trade auction took place today with the trade weighted average up 1.5%. This is the first increase after five consecutive events of lower prices. Anhydrous milk fat increased 2.7% to $6,201 per metric ton or $2.81 per pound. Butter increased 5.6% to $6,068 per metric ton or $2.75 per pound. Buttermilk powder increased 4.5% to $4,398 per metric ton or $1.99 per pound. Cheddar cheese price decreased 3.6% to $5,365 per metric ton or $2.43 per pound. Skim milk powder increased 3.0% to $4,240 per metric ton or $1.92 per pound. Whole milk powder slipped 0.3% to $4,158 per metric ton or $1.89 per pound. Lactose did not trade.
AVERAGE CLASS III PRICES
| 3 Month: | $24.87 |
| 6 Month: | $24.67 |
| 9 Month: | $24.03 |
| 12 Month: | $23.38 |
CHEESE
Cheese prices continue to hold in a lower range giving the impression of being supported but not following through to the upside. Yet at the same time, Class III milk futures are moving higher adding more premium to the market. Traders may feel that moving futures higher could get cash buyers excited resulting in them stepping up to the plate more aggressively. I have not seen milk futures influence the decisions of cash buyers as of yet, but you never can tell what may change in market mentality.
BUTTER
High price has increased the desire of buyers to continue to aggressively purchase supply ahead of time. There seems to be a certain element of fear in the market that supply will tighten as the year progresses. This keeps buyers aggressive as they would rather buy now even though prices are higher rather than chase the market later as supply tightens.
OUTSIDE MARKETS SUMMARY
July corn jumped 14.50 cents closing at $7.57. July soybeans jumped 29 cents closing at $17.2825 with July soybean meal up $10.30 per ton closing at $417.40. July wheat declined 21.25 cents closing at $10.7175. June live cattle gained $0.90 ending at $133.72. July crude oil gained $0.91 closing at $119.41 per barrel. The DOW increased 264 points ending at 33,180 while the NASDAQ gained 114 points closing at 12,176.
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