MILK
Class III milk futures rebounded after being oversold on Tuesday. Underlying cash prices showed further weakness, but the rebound from the lows during spot trading also helped provide support. We have seen this numerous times during a trading period and it does not indicate that the market will turn higher. It just showed buyers were willing to purchase at the lows. Milk production is variable in the Northeastern region with overall levels higher than expected for this time of year. The Northeast Federal Milk Marketing Order is allowing the temporary discarding of milk through July 7. This is a surprise as milk production in the country has been below a year ago. The reason indicated is that Class I demand has been lighter than expected.
The June Monthly Milk Production report will be released on Friday. I estimate milk production to be down 0.3% from the previous year. I estimate cow numbers to be down 2,000 head from the previous month. The market will move based on the numbers even though the report will be history and not expectations. The April report resulted in a significant market reaction.
AVERAGE CLASS III PRICES
| 3 Month: | $20.17 |
| 6 Month: | $20.14 |
| 9 Month: | $19.76 |
| 12 Month: | $19.51 |
CHEESE
Though cheese prices show weakness, cheese demand holds strong in much of the country. It is uncertain how much demand will improve in the future. Cheese buyers have been purchasing for later demand but have not been consistently aggressive. The lower prices are expected to increase buyer interest. Plenty of milk remains available as spot milk prices are $1.50 to $2.00 below class.
BUTTER
Churning has been active, but most believe cream supplies will tighten soon. Some extra supply is expected to be available around the Independence Day holiday but should tighten seasonally during July. Manufacturers have been actively building inventory. The May Cold Storage report to be released on Tuesday will show whether inventory has increased since April.
OUTSIDE MARKETS SUMMARY
July corn closed down 10.25 cents per bushel at $4.3975, July soybeans closed down 18.75 cents at $11.5525 and July soybean meal closed down $7.00 per ton at $357.60. July Chicago wheat closed down 9.25 cents at $5.7275. August live cattle closed up $0.45 at $182.55. August crude oil is up $0.59 per barrel at $81.30. The Dow Jones Industrial Average is up 300 points at 39,135 while the NASDAQ is down 141 points at 17,722.
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