MILK
Class III milk futures are having a difficult time moving higher. Traders are torn between the potential for a seasonal increase of buying interest and the fact that sufficient cheese availability allows buyers to remain less aggressive. Milk futures have been trying to move against the trend of underlying cash. However, continued pressure from underlying cash may indicate there is limited upside potential. Tomorrow is the final trading day for August futures and options with the Federal Order prices announced on Wednesday. Traders anticipate an August Class III price of $20.13 and a Class IV price of $24.81. This is quite a large spread between the two. Class IV price is expected to remain above Class price for quite some time. It is expected to remain that way for a while as butter price is so much higher over cheese. The current fundamentals suggest it will remain that way. Milk production across the country remains variable, but still at low levels for the year.
AVERAGE CLASS III PRICES
| 3 Month: | $20.14 |
| 6 Month: | $20.68 |
| 9 Month: | $20.73 |
| 12 Month: | $20.68 |
CHEESE
Block cheese moved down to the lowest level it has been since November 17, 2021. Moving to this level at a time when prices generally would strengthen is not a good sign. Buyers of cheese are finding sufficient supply in the country through other channels eliminating the need for them to come to the daily spot market to find cheese. Supply is plentiful in the country which leaves sellers coming to the spot market to try to move some product. This results in sellers offering it lower to entice limited buying interest. It is not that demand is not there but that there is more supply than demand.
BUTTER
Supply is not quite as abundant as cheese with inventory 21% below a year ago. Buyers have been increasing ownership to be in position to have sufficient supply available for Fall and holiday demand. If the current pace continues, inventory may end the year significantly below a year ago. which would keep price strong for quite some time.
OUTSIDE MARKETS SUMMARY
September corn gained 15 cents closing at $6.8375. September soybeans fell 70.50 cents ending at $15.3475 with September soybean meal up $0.30 closing at $478.40 per ton. September wheat jumped 35.25 cents closing at $8.20. August live cattle gained $0.75 closing at $141.55. October crude oil jumped $3.95 settling at $97.01 per barrel. The DOW declined 184 points while the NASDAQ declined 124 points.
