MILK
Traders tried to capitalize on the friendly milk production number from the May Milk Production report released on Friday. The increase of block cheese price added to the bullishness during and after spot trading but much of that ran its course during the rest of the day. Futures fell back substantially from their highs. Futures eventually moved more in line with cash. Class IV futures eventually traded with contracts posting lower prices. Traders realized milk production for May was already absorbed into the market with lower-than-expected milk production for the month not resulting in any supply tightness during the month and so far in June. Milk futures have retraced from the highs but are not too much lower. Further buying interest in underlying cash could result in contracts revisiting those highs and moving potentially higher. There is about half of the year to go, and it is the time when demand generally improves.
AVERAGE CLASS III PRICES
| 3 Month: | $20.19 |
| 6 Month: | $20.15 |
| 9 Month: | $19.75 |
| 12 Month: | $19.49 |
CHEESE
The block cheese price is gaining ground on the barrel price with only a 2.50-cent inversion. Barrel supply seems more abundant, and the price could move below blocks in the coming weeks. Buyers will remain willing to purchase at lower prices but may not be interested in aggressively bidding prices higher. Demand should slowly improve as the summer progresses and buyers look ahead to fall and demand later in the year. USDA will release the May Cold Storage report on Tuesday afternoon. It is not expected to show any significant increase in stocks.
BUTTER
The weakness of the butter price today was a surprise as it was anticipated buyers would step up at the lower price. Sellers remained willing to sell supply even at lower prices. However, the current butter price is historically high and profitable for manufacturers. The price is just not as high as it had been a few weeks ago.
OUTSIDE MARKETS SUMMARY
July corn closed down 1.50 cents per bushel at $4.3350, July soybeans closed up 14.75 cents at $11.7525 and July soybean meal closed up $11.00 per ton at $372.80. September Chicago wheat closed down 4.75 cents at $5.7100. August live cattle closed up $1.68 at $184.83. August crude oil is up $0.97 per barrel at $81.70. The Dow Jones Industrial Average is up 261 points at 39,411 with the NASDAQ down 193 points at 17,497.
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