Friday Closing Dairy Market Update - Cheese Inventory Declined

MILK

It has been another negative week with more of the pressure seen in later contracts. That has been a bit unusual as market movement is generally confined to closer contracts. However, the outside market influences have increased the bearishness of traders into next year. Higher prices at the grocery store and the uncertainty of demand through the rest of this year are having substantial impacts on the market. The Bi-annual Cattle Inventory report showed the dairy herd on July 1st at 9.45 million head, down 1% from a year ago. This was not much outside of expectations. The bullish aspect of the report was dairy heifers at 3.75 million head. These are heifers 500 pounds and up. This is a 39.7% ratio of heifers to cows and the lowest ratio since July 2003. This will keep expansions limited and the nation's dairy herd from growing anytime soon.

AVERAGE CLASS III PRICES

3 Month:	$20.88
6 Month:	$20.61
9 Month:	$20.15
12 Month:	$19.82

CHEESE

American cheese inventory declined 10.2 million pounds totaling 847.7 million pounds. This is 5% higher than a year ago. Swiss cheese inventory declined 1.2 million pounds totaling 24.6 million pounds remaining 9% above a year ago. Other cheese inventory increased 4.6 million pounds totaling 633.8 million pounds, up 5% above a year ago. This put total cheese inventory at 1.506 billion pounds, down 6.8 million pounds from May but 5% above a year ago. This is the highest total cheese in inventory for the month of June ever. For the week, block declined 8.50 cents with 5 loads traded. Barrels fell 15 cents with 5 loads traded. Dry whey remained unchanged with 8 loads traded.

BUTTER

Butter inventory increased 10.2 million pounds to a total of 331.8 million pounds. However, this level is still 20% below a year earlier. This should continue to support price. For the week, butter declined 2.25 cents with 50 loads traded. the past two weeks saw 120 loads of butter changing hands on the spot market. Grade A nonfat dry milk price increased 2.50 cents with 17 loads traded.

OUTSIDE MARKETS SUMMARY

September corn fell 11.50 cents closing at $5.6425. August soybeans gained 16 cents closing at $14.3450 with August soybean meal down $2.90 closing at $431.50 per ton. September wheat fell 48.25 cents closing at $7.59. August live cattle gained $1.65 closing at $137.37. September crude oil declined $1.65 per barrel closing at $94.70. The DOW declined 138 points ending at 31,899 while the NASDAQ declined 227 points closing at 11,834.