Thursday Closing Dairy Market Update - Milk Dumped in the Upper Midwest

MILK

Some milk is being dumped as Hastings Creamery in Minnesota has had to shut down their plant discharge for 30 days requiring them to take their plant waste somewhere else as they find a solution to the waste situation to keep the plant open. The milk supply coming to the plant from patrons in both Minnesota and Wisconsin has nowhere else to go as most plants are running at capacity. The milk that cannot find a home is being dumped on farm fields. Farmers are still getting paid for the milk, but there is too much of it to find processing space. Hopefully, a solution will be found to get the plant up and running again. The heavy milk production seen across much of the country has kept plants operating on full schedules and spot milk at a large discount. Class III milk futures reflected the availability of cheese with prices declining after a brief increase. June, July, and August Class III contracts made new lows but did not remain at those lows as the market was overdone to the downside. Underlying cash prices will need to hold or further pressure will be seen. USDA will release the World Agricultural Supply and Demand report tomorrow. The report will show estimates for milk production, milk prices, and product prices for this year and 2024.

AVERAGE CLASS III PRICES

3 Month:	$16.10
6 Month:	$17.14
9 Month:	$17.43
12 Month:	$17.57

CHEESE

Cheese just cannot sustain an extended price rally that lasts more than a few days. Price increases bring sellers in more aggressively as they do not want to hold onto cheese any longer than they need to. There has been some talk or concern over inventory space as cheese production remains strong due to heavy milk output. However, cheese inventory has not been growing, remaining in line with last year making this discussion a bit peculiar. Plants continue to want to keep a low inventory rather than hold supply in anticipation of a higher price.

BUTTER

Even though there is a higher demand for cream from ice cream manufacturers and milk components are decreasing slightly, butter plants indicated cream is still readily available. Butter demand has been steady, but not exceptional. This leaves price range bound where it may remain for the foreseeable future. Supply and demand are balanced with buyers and sellers comfortable at the current price level.

OUTSIDE MARKETS SUMMARY

July corn closed up 6.00 cents per bushel at $6.1025, July soybeans closed up 2.50 cents at $13.6325 and July soybean meal closed down $1.20 per ton at $404.00. July Chicago wheat closed up 9.50 cents at $6.2625. August live cattle closed down $0.95 at $172.25. July crude oil is down $1.60 per barrel at $70.93. The Dow Jones Industrial Average is up 169 points at 33,834 with the NASDAQ up 134 points at 13,239.