MILK
There is a strong potential for milk prices to increase yet this year. USDA does not seem very optimistic according to their recent estimate in the World Agricultural Supply and Demand report. However, even though low prices have yet to be reflected at the retail level, they may be reflected more quickly through export interest. There has been an estimate put out that culling could reach as high as 10% more than last year, but that may be a bit on the high side. Culling has been increasing, but there have been several replacements filling those stalls. That will not continue, but it may prolong the reduction of cow numbers and the decrease in milk production. With some expectations for higher milk prices by Fall, it may keep the desire for farms to hold onto cows a little longer to see if the current low prices will be temporary. However, if there is no definite change in the next few months, farms will likely make some drastic changes.
AVERAGE CLASS III PRICES
| 3 Month: | $15.08 |
| 6 Month: | $16.25 |
| 9 Month: | $16.76 |
| 12 Month: | $17.05 |
CHEESE
Higher cheese prices triggered buying interest in Class III futures. We can see that there has been a certain change in attitude as minor increases in cash previously did not garner much interest in buying futures aggressively. However, that has changed as now underlying cash strength garners more interest from traders to buy futures. There has been a change in attitude to some extent with traders still bearish, but not as much as they had been. However, there will remain caution, and cheese prices are expected to remain choppy. There is anticipation that seasonal buying will increase moving prices to a higher level.
BUTTER
Once butter broke out of the sideways trading range, it has been trending higher. The high volume of trades today during the spot trading period kept some of the strength limited as price could not hold the high it reached during the trading period. Sellers may remain active as price moves higher which may leave price gain slow and calculated. A fair amount of purchasing has already been done for later demand with butter put into freezers. Contracting has also been done for the fourth quarter to some extent. There is uncertainty over the level of demand that will be seen.
OUTSIDE MARKETS SUMMARY
December corn closed down 7.75 cents per bushel at $5.0600, November soybeans closed up 7.25 cents at $13.7800 and December soybean meal closed up $8.40 per ton at $409.40. September Chicago wheat closed down 7.75 cents at $6.5375. August live cattle closed down $0.05 at $180.13. August crude oil is down $1.31 per barrel at $74.11. The Dow Jones Industrial Average is up 76 points at 34,585 with the NASDAQ is up 131 points at 14,245.
