MILK
Milk futures came under extreme pressure again today. What is unique is that the pressure extended through the third quarter of 2023 with double-digit losses for both Class III and Class IV futures. Futures contracts that far out generally do not move as much as most of the influence from price movement is confined to closer contracts. It seems that traders are already factoring in a recession prior to one even officially happening. It is yet uncertain if it will actually take place, but traders have looked at the impact that took place on milk prices during the previous recession in 2007-2009 and are already trading it. Futures are due to a bounce as the decline has been relentless. However, something will need to trigger a bounce and there is nothing to get traders excited. Front-month July Class III futures posted a nice bounce with a gain of 29 cents as much of the contract is already priced and traders realized it had been oversold in relation to underlying cash prices.
AVERAGE CLASS III PRICES
| 3 Month: | $21.79 |
| 6 Month: | $21.84 |
| 9 Month: | $21.40 |
| 12 Month: | $21.00 |
CHEESE
There is some concern rising in the industry. One is the continued difficulty in finding truck drivers to haul both milk and final products. This continues to create headaches and longer lead times. Another concern is that even though milk prices have been strong, some farms are reducing cow numbers due to the difficulty in finding sufficient help to maintain a full operation. Discounted milk in the Midwest is offered as low at $6.00 under class as supply is abundant and some plants cannot take on extra milk due to the lack of employees. It seems like this is not going to change anytime soon. Yet, even with this, demand is being filled without much difficulty.
BUTTER
Butter sales to the food service industry are lower. This may continue to impact both price and availability. Inventory could begin to build in comparison to a year ago if this pattern continues. Cream is available for churning keeping plants as busy as they want to be. Retail demand for butter is also slowing as consumers adjust to high inflation. People still need to eat but will purchase less and may utilize alternatives to some of the staple foods they have been accustomed to. Export demand will need to remain strong in order for price to remain supported.
OUTSIDE MARKETS SUMMARY
July corn gained 8.25 cents closing at $7.4425. July soybeans gained 5 cents closing at $15.8025 with July soybean meal gaining $9.80 per ton closing at $462.60. July wheat slipped 1.50 cents ending at $7.9225. August live cattle gained $1.57 closing at $134.50. August crude oil declined $0.97 closing at $98.53 per barrel. the DOW gained 70 points closing at 31,038 while the NASDAQ gained 40 points closing at 11,362.
