MILK
Class III milk futures increased sharply due to the large increase of cheese prices. Block posted the largest one-day increase since September 23, 2020. This was a surprise as cheese production has been strong and milk production has been plentiful was some milk being dumped until recently and spot milk prices in the Midwest still $3.00 to $7.00 under class. Buyers seem to be leap-frogging over each other to purchase cheese and with the jump today, they might be more aggressive as they feel left behind. Greater concern will develop now that the milk production report was released, and it showed heavy culling during the month. The top 24 states showed 20,000 fewer cows than May with the U.S. cow numbers declining 16,000 head. This is nearly a repeat of August 2021 when there was also a decline of 20,000 head with heavy culling following the next few months that year. Decreasing cow numbers and other factors led to record-high milk prices in 2022. Cow numbers in the top 24 states remained 14,000 head more than the previous year with U.S. cow numbers declining 5,00 head from a year earlier. Milk production in the top 24 states was up 0.2% while production in the U.S. was slightly lower than the previous year at 18.916 billion pounds. Milk production per cow was only one pound higher at 2,028 pounds with U.S. production per cow also up June one pound at 2,011 per cow. This may push milk futures higher as some fear over a tighter milk supply may fuel greater buying interest.
AVERAGE CLASS III PRICES
| 3 Month: | $15.72 |
| 6 Month: | $16.95 |
| 9 Month: | $17.35 |
| 12 Month: | $17.55 |
CHEESE
Block cheese price had the largest one-day gain since September 23, 2020. This was a surprise as cheese sellers finally decided to hold back to see just how aggressive buyers would be. Now that the milk production report was released for June showing a substantial decline of cow numbers, buyers may remain aggressive with sellers continuing to hold back. The June Cold Storage report will be released on Tuesday which could add some more volatility to the market.
BUTTER
Butter did not follow the strength of cheese with price slipping as buyers and sellers may be content with the current price level for the time being. Churning has slowed but butter supply is sufficient for demand with inventory larger than a year ago. Buyers may become more aggressive now that milk production is slowing.
OUTSIDE MARKETS SUMMARY
December corn closed down 6.75 cents per bushel at $5.4625, November soybeans closed down 4.00 cents at $14.0475 and December soybean meal closed down $4.30 per ton at $410.60. September Chicago wheat closed down 0.75 cent at $7.2700. October live cattle closed down $0.98 at $182.75. September crude oil is up $0.36 per barrel at $75.65. The Dow Jones Industrial Average is up 163 points at 35,225 with the NASDAQ down 295 points at 14,063.
