Tuesday Closing Dairy Market Update - Traders Remain Bearish Due to Supply

MILK

The continued weakness of milk futures primarily for Class III milk is of grave concern. There have been more reports of sale barns and stockyards being full of cattle as culling and the reducing of cow number is taking place. There have yet to be official numbers as to the level of culling taking place as those will not be available until later next month with some indication on the weekly slaughter reports. How quickly this could impact milk output is uncertain. Some of the cows could be culled as lower producers to make room for replacements that have the genetic potential to produce more milk. Some producers and bankers have indicated that farms are in a better financial position due to the good year last year with many of them not having had to dip into operating loans yet. This paints a different picture as to how quickly milk production may decrease. USDA will announce the June Federal Order class prices tomorrow. Traders anticipate the Class III price to be $14.92 and the Class IV price to be $18.16.

AVERAGE CLASS III PRICES

3 Month:	$15.30
6 Month:	$16.48
9 Month:	$16.93
12 Month:	$17.18

CHEESE

Block cheese price broke below the low and is the lowest since May 8, 2020. Barrel cheese moved to a new low with price back to the lowest level since September 1, 2021. It is a buyer's market as sellers continue to move supply lowering offers to find buyers. Sellers indicate they see little upside price potential for a time and want to keep production from building inventory. This might be regretted later but fresh cheese needs to continue to move as purchases of cheese for aging programs remain ongoing, but not enough to reduce available supply.

BUTTER

Grade A nonfat dry milk fell to the lowest level since February 21, 2021, with continued weakness keeping pressure on Class IV futures. Supplies of nonfat dry milk are plentiful with sellers desiring to move product. Butter production remains strong with sufficient cream remaining available. Butter is being produced, stored, and available for demand with inventory growing. This will leave sufficient supply available through the end of the year.

OUTSIDE MARKETS SUMMARY

December corn closed down 27.25 cents per bushel at $5.6100, November soybeans closed down 28.75 cents at $12.9425 and December soybean meal closed down $13.50 per ton at $385.40. September Chicago wheat closed down 39.25 cents at $6.9900. August live cattle closed up $1.90 at $172.50. August crude oil is down $1.67 per barrel at $67.70. The Dow Jones Industrial Average is up 212 points at 33,927 with the NASDAQ up 220 points at 13,556.