MILK
Milk futures showed substantial losses as lower spot prices triggered aggressive selling. Trading volume was heavy with 1,352 contracts in July and 1,169 in August. It is not very often we see trading volume of that magnitude. July Class III price closed below June as underlying cash continues to erode. If prices continue to show weakness, it will be very difficult for dairy operations to maintain cash flow. The milk checks for June will likely increase culling and as farmers look for ways to trim costs and generate income. Farmers will need to take some drastic steps to weather the storm, which hopefully will be short-lived. There are plenty of milk supplies available, which keeps manufacturers busy and continuing to offer supply to the spot market rather than hold in anticipation of higher prices that may not unfold for a period. Buyers of dairy products continue to see sufficient supply with little concern over the market tightening anytime soon. Tuesday is the last day to trade June futures and options with the Federal Order prices announced on Wednesday. The corn crop's good-to-excellent condition rating declined 5 percentage points with the soybean condition down 3 percentage points.
AVERAGE CLASS III PRICES
| 3 Month: | $15.16 |
| 6 Month: | $16.34 |
| 9 Month: | $16.89 |
| 12 Month: | $17.15 |
CHEESE
Block cheese price broke to a new low, moving back to the lowest it has been since May 7, 2020. Barrel price is near the low of May 18, and if it moves lower, it will put it back to the lowest level since Nov. 17, 2021. Strong cheese output keeps plentiful supply available for demand and then some. As a result of heavy cheese production, there is a lot of dry whey available to the market. Sellers are not hesitant to bring it to the spot market to move it and keep inventory from building.
BUTTER
Butter is again at the bottom end of the trading range with the price $1 above the block cheese price. Buyers might be interested in stepping up to purchase at this level as they slowly gain ownership of supply for later in the year. Grade A nonfat dry milk is within 0.25 cent of the recent low. If it moves below that level, it will be back to the lowest level since Feb. 25, 2021. Nonfat dry milk is the anchor on the Class IV price, limiting any upside price potential.
OUTSIDE MARKETS SUMMARY
December corn closed up 0.25 cent per bushel at $5.8825, November soybeans closed up 13 cents at $13.2300, and December soybean meal closed up $.60 per ton at $398.90. September Chicago wheat closed down 8.25 cents at $7.3825. August live cattle closed down $0.18 at $170.60. August crude oil is up $0.21 per barrel at $69.37. The Dow Jones Industrial Average is down 13 points at 33,715 with the NASDAQ down 157 points at 13,336.
