MILK
Milk future slipped back as traders were a bit disappointed over spot prices not being able to move higher. For traders to turn bullish, they will need to see underlying cash prices continue to show advances even if they are only minor ones. Tomorrow is the last trading day for August futures and options with the August Federal Order class prices announced on Wednesday. The August Class III price will be much better than the July but still leave much to be desired. Heavier culling is expected to continue as farms will reduce cow numbers to generate income from strong cull cow prices and to reduce feed costs. The bar is raised on per cow milk production as the animals need to pay their way. Current milk prices are not conducive for dairy farmers to increase cow numbers or expand at the present time or in the near future.
AVERAGE CLASS III PRICES
| 3 Month: | $18.24 |
| 6 Month: | $18.25 |
| 9 Month: | $18.26 |
| 12 Month: | $18.30 |
CHEESE
Traders were waiting for cheese prices to move but they were disappointed as prices remained unchanged. This also keeps them guessing as to market direction which has resulted in weakness today. A case can be made either way for market movement. The time of year would favor the support of higher prices moving forward, but current milk production is sufficient for bottling and manufacturing. It is running below year-earlier levels. Exports are below a year ago but are expected to improve as the year progresses.
BUTTER
Butter may be a bit more bearish than cheese at this point, but the price is higher. Churning is slower than it has been, but cream supply is improved as more cream is available as milk is standardized for the school system. Inventory is higher than a year ago which may limit upside price potential.
OUTSIDE MARKETS SUMMARY
December corn closed up 8.25 cents per bushel at $4.9625, November soybeans closed up 18 cents at $14.0575 and December soybean meal closed up $3.80 per ton at $418.80. December Chicago wheat closed down 4.75 cents at $6.1700.
October live cattle closed up $0.38 at $181.55. October crude oil is up .14 per barrel at $79.97. The Dow Jones Industrial Average is up 213 points at 34,560 with the NASDAQ is up 114 points at 13,705.
