MILK
Spring flush has mostly run its course with milk production holding steady for now. Milk production is higher than a year ago and should remain that way for a while until lower milk prices have a greater impact on culling and reduced milk output. If the current dry spell across a large portion of the country continues, feed prices could be substantially higher over time as supply could be lower. What began as a great crop year has turned quickly with crop conditions deteriorating. It is not too late for rain to have a positive impact on crops. Schools are closed but there are many schools offering meals during the summer at reduced costs for students that are in need. Class III futures posted double-digit gains in July through November contracts adding to the gains of yesterday. June futures have seen limited gain as much of the contract is already priced. More of the focus of traders has moved to July.
AVERAGE CLASS III PRICES
| 3 Month: | $16.40 |
| 6 Month: | $17.46 |
| 9 Month: | $17.67 |
| 12 Month: | $17.73 |
CHEESE
Cheese prices could see further strength tomorrow, but prices could move to a level at which it will attract a greater interest from sellers. The current cheese supply is plentiful leaving buyers limited as to how much they want to pay for product. The inability of butter to break out of a range may indicate cheese may be the same. For years, butter has been the leader of price direction for the rest of the spot categories. This has changed somewhat over the past few years but should be watched as it may indicate the direction of cheese as butter may react more quickly to an increase in demand for dairy products.
BUTTER
Price has fallen for four consecutive days which puts it at a level where buyer interest might increase. So far, this year has been uneventful and void of volatility for butter. Current butter output and demand may keep price fluctuating within a range for an extended period. Continued hot weather and increased ice cream production will tighten cream supply seasonally. However, that is not expected to result in a repeat of last year when there was fear of a butter shortage. Market conditions are very different at this point.
OUTSIDE MARKETS SUMMARY
July corn closed down 3.75 cents per bushel at $6.0425, July soybeans closed up 7.50 cents at $13.6075 and July soybean meal closed up $8.50 per ton at $405.20. July Chicago wheat closed down 11.00 cents at $6.1675. August live cattle closed down $2.30 at $173.20. July crude oil is up $0.73 per barrel at $72.47. The Dow Jones Industrial Average is up 92 points at 33,665 with the NASDAQ is down 172 points at 13,105.
