MILK
Strong milk production has been dominating the market for several weeks. However, spring flush has passed with some areas of the country seeing lower milk output which is relieving some of the heavy supplies. The Midwest continues to have strong milk output as the weather has been cool enough to keep production steady. Milk continues to be dumped in some areas due to various reasons, mostly because of heavy supply. Processors continue to maintain full work schedules as they try to handle as much milk as possible. Spot milk remains at a large discount to cash. This continues to put pressure on milk futures with Class III showing the greatest pressure due to cheese and dry whey. June Class III milk moved to a new contract low with price falling below $15.00 and closing at $14.93. No one anticipated milk price would fall this low a year after record-high milk prices last year. It will be interesting to see how the market will react in the near term due to the dryness seen across much of the country. Milk prices generally follow corn prices to some extent. The current dry weather concerns are impacting corn futures which may in turn influence milk prices over time as high feed prices and the potential of the lack of feed in some areas will impact cow numbers.
AVERAGE CLASS III PRICES
| 3 Month: | $15.50 |
| 6 Month: | $16.63 |
| 9 Month: | $17.05 |
| 12 Month: | $17.26 |
CHEESE
Cheese demand is termed as steady but not enough to keep up with current production. It is not so much that inventory is growing significantly, but that milk supply is heavy with manufacturing plants not able to handle all of it. Cheese is being manufactured and moved to the market to whomever will purchase it even at lower prices. Cheese continues to be offered on the daily spot market as sellers are not able to move it through regular channels. Buyers show little interest in purchasing or contracting for later demand.
BUTTER
The availability of cream has been somewhat steady keeping butter manufacturers and ice cream manufacturers satisfied. Domestic demand has also been steady while international demand has been weaker. This leaves inventory growing for the time being. Current supply and demand are keeping the market balanced.
OUTSIDE MARKETS SUMMARY
July corn closed up 15.50 cents per bushel at $6.2325, July soybeans closed up 40.00 cents at $14.2825 and July soybean meal closed up $4.50 per ton at $394.20. July Chicago wheat closed up 31.25 cents at $6.6150. August live cattle closed up $0.10 at $171.08. July crude oil is up $2.29 per barrel at $70.56. The Dow Jones Industrial Average is up 429 points at 34,408 with the NASDAQ up 156 points at 13,783.
