MILK
Milk futures showed volatility as traders were first optimistic over cash prices, but then disappointed over the inability of spot prices to move higher. Milk futures suffered minor losses in the end. Trading activity was good considering the limited movement of underlying cash. The Global Dairy Trade auction took place yesterday with the trade weighted average down 1.0% from the previous event. There were 148 bidders during the auction with 25,956 metric tons sold at an average price of $3,289 per metric ton. Anhydrous milk fat gained 3.4% to $4,745 per metric ton or $2.15 per pound. Butter declined 2.7% to $4,705 per metric ton or $2.13 per pound. Cheddar cheese fell 10.1% to $3,955 per metric ton or $1.79 per pound. Skim milk powder declined 0.6% to $2,503 per metric ton or $1.4 per pound. Whole milk powder declined 1.5% to $3,100 per metric ton or $1.41 per pound. Lactose was not offered at this event. This is the fourth consecutive event the trade weighted average has been unchanged to lower. USDA will release the June Milk Production report tomorrow. I estimate milk production to be up 0.3% with cow numbers down 8,000 head from May.
AVERAGE CLASS III PRICES
| 3 Month: | $15.33 |
| 6 Month: | $16.47 |
| 9 Month: | $16.94 |
| 12 Month: | $17.18 |
CHEESE
The heavy milk supply is reduced as hot weather and culling are impacting milk output. Spot milk in the Midwest is seeing prices strengthen with prices now ranging from $3.00 to $7.00 under class. Demand is slowly improving with some cheese manufacturers indicating extra cheese that previously had been moved to storage or offered on the spot market, is now being ordered before moving off the production line. Buyers have stepped up to get ahead of further price gains. Once that buying is finished, price may settle back down again into a sideways pattern.
BUTTER
Churning activity has slowed from what it had been much of the year so far. Spot cream loads are tight with limited availability. Ice cream production is utilizing large volumes of cream. Butter inventories have been increasing running ahead of last year, but those inventories may begin to decline through the end of the year.
OUTSIDE MARKETS SUMMARY
December corn closed up 18.50 cents per bushel at $5.5300, November soybeans closed up 13.50 cents at $14.0875 and December soybean meal closed down $1.30 per ton at $414.90. September Chicago wheat closed up 57.00 cents at $7.2775. October live cattle closed up $0.18 at $183.73. September crude oil is down $0.37 per barrel at $75.29. The Dow Jones Industrial Average is up 109 points at 35,061 with the NASDAQ is up 4 points at 14,358.
