MILK
Traders anticipated further weakness in cheese prices today. Class III futures were lower before spot trading and remained under pressure during and after trading. The July contract has declined nearly $0.75 per cwt over the past two trading days. This puts it down to the lowest close since June 7. Cheese buyers will buy at the lows and sellers will sell at higher prices. The overall trend is slightly higher, but the way will be volatile. Milk production is steady or slowing as summer weather becomes more prominent. Culling is anticipated to slow as the outlook for milk prices rises.
Higher milk prices will also soften the blow of increasing heifer prices and keep barns filled. Spot milk remains at a discount of $1.00 to $2.00 under class. This will change as we move through the summer and the milk supply tightens.
AVERAGE CLASS III PRICES
| 3 Month: | $20.31 |
| 6 Month: | $20.14 |
| 9 Month: | $19.71 |
| 12 Month: | $19.47 |
CHEESE
The weakness of cheese the past two days has hit Class III futures hard. Cheese prices are not expected to see much downside price potential as lower prices will increase buyer interest. The cheese supply is sufficient for current demand, but buyers will look to increase ownership on price weakness. Even though more milk is moving to manufacturing inventory is not expected to increase and should decrease during the second half of the year.
BUTTER
There is a strong chance that the price will move to recent highs and possibly exceed that level. Butter demand is improving at the retail level. Cream supply will be tightening as production will slow due to greater demand for cream from ice cream and other Class II products. If cream prices increase, some plants may sell some cream rather than churn it.
OUTSIDE MARKETS SUMMARY
July corn closed down 6.25 cents per bushel at $4.4375, July soybeans closed down 22.00 cents at $11.5775 and July soybean meal closed down $8.10 per ton at $360.30. July Chicago wheat closed down 21.25 cents at $5.9150. August live cattle closed down $0.38 at $182.80. July crude oil is up $2.21 per barrel at $80.66. The Dow Jones Industrial Average is up 189 points at 38,778 with the NASDAQ is up 168 points at 17,857.
