MILK
There were numerous estimates of milk prices reaching $30 this year. That has put extra premium in milk futures, as traders were sure lower milk output would tighten supplies significantly. The year is not quite half over, and prices are still a way from achieving that level. That certainly is not to say that it may not happen, but the recent downturn of prices may temper some of the optimism the market held. There is concern over the impact of inflation on the demand for dairy products. Fuel prices continue to escalate, and food prices are increasing, putting more strain on the budget. Farms will continue to do the best they can to hold milk production steady or even higher if possible. High feed prices will continue to be a challenge.
AVERAGE CLASS III PRICES
| 3 Month: | $24.32 |
| 6 Month: | $24.18 |
| 9 Month: | $23.67 |
| 12 Month: | $23.12 |
CHEESE
Prices have been declining over the past three weeks, which has been somewhat of a surprise. It was anticipated buyers would step back into the market more aggressively at lower prices, but that has not taken place. Buyers have been active but mainly on price weakness. The amount of cheese they have already purchased ahead is now leaving them unconcerned over supply in the foreseeable future. This reduces the anxiety over a tightening supply.
BUTTER
Butter is in a different posture with price substantially higher than cheese. Inventory is quite a bit lower than last year. Production has been sufficient to meet demand and increase inventory on a month-over-month basis, but it has not been able to gain on last year. Unless demand really falls off, price will remain elevated.
OUTSIDE MARKETS SUMMARY
July corn slipped a penny, closing at $7.6825. July soybeans declined 9 cents, closing at $16.9850, with July soybean meal down $4.10 per ton, closing at $411. July wheat fell 20.75 cents, ending at $10.5025. June live cattle gained $1.20, closing at $135.20. July crude oil fell $2, ending at $118.93 per barrel. The Dow declined 152 points, closing at 30,365, while the NASDAQ gained 19 points, closing at 10,828.
