MILK
Milk futures showed strong gains this week with July and later contracts making new contract highs. The gains have been quick and steep, which generally does not last long unless further support comes from positive fundamentals. Buyers perceive that milk supply will tighten and demand will improve as the year progresses. The strength may be premature resulting in a significant price correction once the buying frenzy is finished and the market comes in line with demand. Milk production has been lower than a year ago, but manufacturing plants have been running full schedules. More milk has been moving to plants as schools have closed and will close over the next few weeks. More spot milk is becoming available with prices ranging from $4.00 below to $0.50 above class.
AVERAGE CLASS III PRICES
| 3 Month: | $20.25 |
| 6 Month: | $20.07 |
| 9 Month: | $19.69 |
| 12 Month: | $19.38 |
CHEESE
For the week blocks declined 3.75 cents with 34 loads traded. Barrel cheese price jumped 21.25 cents with 10 loads traded. The dry whey price increased by 3 cents with 12 loads traded. The surprise this week was the increase in barrels as fundamentals do not suggest prices to be this high at this time. This changed milk prices and production outlook for the rest of the year. USDA already estimated milk output to increase by one billion pounds. Higher milk prices are generally a result of better milk prices. Inventory is not above a year ago which could result in a tighter supply if demand were to improve.
BUTTER
For the week, butter increased 8 cents moving within 0.50 cent of the previous high. There were 20 loads traded. The Grade A nonfat dry milk price gained 1.25 cents with 30 loads traded. Churns remain active due to the plentiful cream supply. The intent is to churn as much as possible utilizing the available cream. The supply will tighten as the production of ice cream and other Class III products increases.
OUTSIDE MARKETS SUMMARY
July corn closed down 4.50 cents per bushel at $4.5250, July soybeans closed up 11.75 cents at $12.2800 and July soybean meal closed up $1.10 per ton at $368.80. July Chicago wheat closed down 12.00 cents at $6.5125. June live cattle closed up $2.03 at $181.05. June crude oil is up $0.83 per barrel at $80.06. The Dow Jones Industrial Average is up 134 points at 40,004 with the NASDAQ down 12 points at 16,686.
