Wednesday Closing Dairy Market Update - May Milk Production Up 0.6%

MILK

It was a strong day in Class III futures as early strength gave way to some retracement as block cheese initially traded lower. However, the rebound of blocks eventually increased the buying interest of traders. An outside influence was likely the large gains in corn futures. Traders likely traded a correlation between corn and milk prices. Historically, corn impacts the milk price as higher corn prices most often translates into higher milk prices. Cow numbers will decline as feed prices increase substantially increasing the desire to cull cows that are lower milk producers eventually tightening milk supply. The May Milk Production report does not support a change in trend anytime soon. Milk production in the top 24 states was 0.8% above production in May 2022. Production per cow averaged 2,126 pounds, which was 11 pounds higher than a year ago. Cow numbers totaled 8.95 million head unchanged from April, but 24,000 head more than a year ago. Milk production in the country increased 0.6% with production per cow averaging 2,108 pounds and 10 pounds above a year ago. Cow numbers were unchanged at 9.43 million head, 13,000 more than May 2022, but unchanged from April. This does not indicate farmers are culling cows more heavily yet and could mean heavy milk supply for a longer period.

AVERAGE CLASS III PRICES

3 Month:	$15.79
6 Month:	$16.95
9 Month:	$17.34
12 Month:	$17.51

CHEESE

Dairy Market News reports that cheese manufacturers are reporting an increase in demand with loads of cheese steadily moving. Buyers may show more interest in purchasing cheese for later demand Spot milk still retains a discount of as much as $11.00 below class, but the amount of spot milk available has not been increasing. Milk is still being dumped, but the hotter weather may begin to take a toll on milk production seasonally. Plants are trying to utilize as much milk as possible to keep from dumping.

BUTTER

Butter still has not found solid support as it nears the bottom end of the trading range. Cream supply is reportedly steady even though ice cream production has increased seasonally. Churning is active with some plants running on full schedules seven days a week. With available supply, plants want to utilize what they can as supply of cream is expected to tighten as the summer progresses.

OUTSIDE MARKETS SUMMARY

December corn closed up 31.25 cents per bushel at $6.2875, November soybeans closed up 34.25 cents at $13.7700 and July soybean meal closed up $26.40 per ton at $439.20. July Chicago wheat closed up 38.75 cents at $7.3450. August live cattle closed up $0.05 at $169.75. August crude oil is up $1.34 per barrel at $72.53. The Dow Jones Industrial Average is down 102 points at 33,952 with the NASDAQ down 165 points at 13,502.