Wednesday Closing Dairy Market Update - May Income Over Feed Is $4.83

MILK

Class III futures continued to make new contracts lows. Substantial premium was removed from the August contracts as underlying cash is not finding solid support. July Class III futures closed at $14.01 and the lowest close of the contract. Income over feed for the month of May was finally determined. The average soybean meal price was $423.58, a decline of $33.57 from April. This put income over feed at $4.83 and the lowest income-over-feed price since Dairy Margin Coverage program began in 2015. It first was the Margin Protection Program. Those who chose the $9.50 coverage level will receive a check for $4.67 per cwt if the 5-million-pound cap has not been reached. The Global Dairy Trade auction took place Tuesday with the trade-weighted average declining 3.3%. There were 24,837 metric tons of dairy products sold during the event. Anhydrous milk fat declined 3.4% to $4,579 per metric ton or $2.08 per pound. Butter declined 10.4% to $4,842 per metric ton or $2.20 per pound. Buttermilk powder declined 11.4% to $2,189 per metric ton or $0.99 per pound. Cheddar cheese declined 3.1% to $4,386 per metric ton or $1.99 per pound. Skim milk powder declined 6.0% to $2,525 per metric ton or $1.15 per pound. Whole milk powder declined 0.4% to #3,149 per metric ton or $1.43 per pound.

AVERAGE CLASS III PRICES

3 Month:	$14.76
6 Month:	$15.99
9 Month:	$16.52
12 Month:	$16.83

CHEESE

The pattern continues with price increases brief followed by lower prices. Even though it seems prices may be at the bottom, weakness continues to be seen. We know prices will not decline indefinitely, but at what point they will turn is uncertain. Plentiful milk supply leaves sufficient for bottling and manufacturing. More milk is being moved to cheese production, which keeps the market on the defensive as cheese continues to be offered on the spot market.

BUTTER

With world price declining and U.S exports of butter lagging last year substantially, there is little reason to believe price will move much higher anytime soon. Cream supply continues to remain sufficient and is not seeing the tightening usually seen by now. Demand from the food service industry is steady. Contracting is being done for the fourth quarter with some butter being put into freezers for later demand.

OUTSIDE MARKETS SUMMARY

December corn closed steady at $4.9350, November soybeans closed up 1.25 cents at $13.5500 and December soybean meal closed down $2.80 per ton at $393.20. September Chicago wheat closed up 32.50 cents at $6.7425. August live cattle closed down $1.88 at $174.95. August crude oil is up $2.04 per barrel at $71.83. The Dow Jones Industrial Average is down 130 points at 34,289 with the NASDAQ down 25 points at 13,792.