MILK
The past three days have been brutal for nearby Class III futures. The July contract fell $1.38 over the past 3 days with futures closing at the lowest level since May 28th. Later contracts suffered losses but not to the same extent. Class IV futures have held up better as butter and nonfat dry milk prices have not seen the selling pressure as cheese has. The volatility seen over the past weeks would suggest prices could rebound just as quickly as they fell.
The Global Dairy Trade auction took place today with the trade-weighted average down 0.5% from the previous event. There were 159 bidders with 16,787 metric tons sold. Anhydrous milk fat price declined 1.2% to $7,317 per metric ton or $3.32 per pound. Butter jumped 6.2% to $7,350 per metric ton or $3.33 per pound. Cheddar cheese declined 1.0% to $4,205 per metric ton or $1.91 per pound. Lactose increased 1.9% to $801 per metric ton or $0.36 per pound. Skim milk powder increased by 0.7% to $2,766 per metric ton or $1.25 per pound. Whole milk powder decreased by 2.5% to $3,394 per metric ton or $1.54 per pound. Buttermilk powder and Mozzarella cheese were not offered. The dairy markets will be closed on Wednesday.
AVERAGE CLASS III PRICES
| 3 Month: | $20.00 |
| 6 Month: | $19.96 |
| 9 Month: | $19.62 |
| 12 Month: | $19.38 |
CHEESE
The buyers of cheese were not very interested today. It was anticipated they would step up more aggressively due to the recent price weakness, but today was not the day. The magnitude of the weakness was a surprise. The current cheese supply is sufficient for demand with more milk available for manufacturing. The current supply is meeting demand without inventory increasing. Inventory could decrease rapidly for the rest of the year if international demand remains robust and domestic demand improves.
BUTTER
Butter price is holding support. It is not running higher as supply and demand are somewhat balanced. The market is supported and may see further strength as butter production slows for the summer. Manufacturers have been making butter and freezing it to satisfy demand later in the year. They were working to build an inventory to secure sufficient supply for the higher demand period.
OUTSIDE MARKETS SUMMARY
July corn closed up 6.25 cents per bushel at $4.5000, July soybeans closed up 16.25 cents at $11.7400 and July soybean meal closed up $4.30 per ton at $364.60. July Chicago wheat closed down 9.50 cents at $5.8200. August live cattle closed down $0.70 at $182.10. August crude oil is up $0.99 per barrel at $80.71. The Dow Jones Industrial Average is up 57 points at 38,835 with the NASDAQ up 5 points at 17,862.
