MILK
Class III milk futures were mostly higher even though cheese prices declined. The losses yesterday had already factored in the weakness of prices. Some short covering might have taken place due to the recent decline. Futures could rebound due to extreme volatility, leaving traders cautious. Trading volume was strong in Class III futures with June showing 1,460 contracts with July over 1,000 contracts traded. Class IV futures showed unusually strong volume. There is a possibility milk production may remain stronger than anticipated for the year. USDA had increased its expectations of the World Agricultural Supply and Demand report rained estimated milk production by one billion pounds from their previous estimate. This may be accurate if the current trend continues. Milk production has been flat over the past week as spring flush seems to have run its course. Component values remain strong as hot weather has not impacted cow comfort to any great extent.
AVERAGE CLASS III PRICES
| 3 Month: | $19.28 |
| 6 Month: | $19.52 |
| 9 Month: | $19.32 |
| 12 Month: | $19.14 |
CHEESE
Block cheese price moved to the lowest level since May 3 as cheese buyers stepped back as the price had moved too high and fast. It is uncertain where cheese prices should be relative to supply and demand. Buyers remain willing to purchase cheese but at lower prices. The cheese inventory is not larger than a year ago but is sufficient to meet demand. Demand needs to improve seasonally as cheese production trends higher as more milk moves to manufacturing.
BUTTER
Spot butter showed further weakness but did find support at a lower price during spot trading today. That does not mean price has found support, but buying interest increased at the lower price. The price could be low enough to increase buyer interest as they increased ownership for expected demand later in the year. The current inventory is higher than a year ago.
OUTSIDE MARKETS SUMMARY
July corn closed down 7.25 cents per bushel at $4.5525, July soybeans closed down 15.50 cents at $12.14 and July soybean meal closed down $7.50 per ton at $369.10. July Chicago wheat closed down 7.50 cents at $6.9275. August live cattle closed down $1.63 at $180.20. July crude oil is down $.57 per barrel at $79.26. The Dow Jones Industrial Average is down 411 points at 38,442 with the NASDAQ down 99 points at 16,921.
