Wednesday Closing Dairy Market Update - Spot Milk Supply Tightens

MILK

Milk production has been declining seasonally due to hot weather and heavier culling. However, some areas have had a reprieve from the hot weather which has stabilized milk production to some extent. Spot milk availability has changed significantly over the past few weeks with spot price now generally running at class or higher. More milk is moving to deficit areas for school accounts which is pulling some supply from manufacturing. Plants are working with patron milk and already contracted supply finding limited amounts available on the spot market. Class III futures were generally lower as the weakness of barrels and dry whey exceeded the minor gain of blocks. Traders did not like the weakness of barrels, anticipating a further retracement. The strength of butter today might provide strength for the entire market.

AVERAGE CLASS III PRICES

3 Month:	$17.68
6 Month:	$17.84
9 Month:	$16.93
12 Month:	$17.18

CHEESE

So far, cheese output has been steady. Cheese yields have decreased seasonally with cheese makers compensating for lower components. Cheese demand is termed as steady. Buyers are slowly purchasing cheese in preparation for upcoming Fall demand. Cheese availability is mixed depending on variety and area of the country.

BUTTER

Cream supply has tightened with spot loads of cream nearly non-existent. Demand is improving with retail and food service placing more orders. The large volume of loads traded on the spot market today and the increase in price may indicate greater interest is developing in increasing ownership of supply.

OUTSIDE MARKETS SUMMARY

December corn closed up 6.00 cents per bushel at $4.8150, November soybeans closed up 18.25 cents at $13.2350 and December soybean meal closed up $2.10 per ton at $382.60. September Chicago wheat closed down 0.75 cent at $5.9775. October live cattle closed down $0.70 at $179.28. September crude oil is down $1.75 per barrel at $79.24. The Dow Jones Industrial Average is down 181 points at 34766 with the NASDAQ down 156 points at 13,475.