MILK
Milk futures were generally higher today with only September and October Class III futures showing moderate losses. This was likely due to the price increases the past few days being greater than what underlying cash prices indicted. These contracts needed to realign to move closer to underlying cash. Class III contracts through February are now above $20.00 with November and December at $21.00 and above. The extended period of hot weather is having an impact on both milk production and components. This impacts milk volume and cheese yield which may be in the back of the minds of buyers as they are looking ahead to school demand and preparation for the upcoming end-of-the-year holiday demand. There remains concern the recent bump of prices may be limited as buyers continue to remain cautious. However, many times steadily improving underlying cash prices will bring more buyers in from the sideline as they want to purchase before prices move too high. This can start a bidding frenzy even if fundamentals do not suggest it. USDA will release the World Agricultural Supply and Demand report tomorrow which provides their estimates on milk production, milk prices, and product prices for this year and next year as well as estimates on grain production and grain prices.
AVERAGE CLASS III PRICES
| 3 Month: | $20.35 |
| 6 Month: | $20.62 |
| 9 Month: | $20.38 |
| 12 Month: | $20.18 |
CHEESE
There are reports of softer demand at the retail level as consumers adjust to higher food prices. This leaves more product available to the market eliminating concern over supply tightness. Cheese prices have defied gravity with five consecutive days of steady to higher prices. The last time we saw this was in May when blocks were steady to higher for six consecutive days after which price fell like a rock. This does not indicate price will fall similarly but it does provide hope for extended price strength.
BUTTER
Cream supply is tightening but it is not causing any shortages. Some plants are selling extra cream due to the inability of running at maximum capacity due to labor shortages. That has been a constant struggle since 2020 and one that may not be rectified anytime soon. Lower churning schedules keep supply available but keep inventory from growing.
OUTSIDE MARKETS SUMMARY
September corn gained 8 cents closing at $6.2925. August soybeans gained 20.75 cents ending at $17.0950 with August soybean meal up $4.60 closing at $520.20 per ton. September wheat gained 11 cents closing at $8.1075. August live cattle gained $1.40 closing at $140.60. September crude oil jumped $2.41 per barrel closing at $94.34. The DOW gained 27 points closing at 33,337 while the NASDAQ declined 75 points closing at 12,780.
