MILK
Milk production is variable across the country. The recent hot weather has impacted cow comfort and affected milk output. This is seasonal and not unexpected. Even with the impact of hot weather, spot milk prices are like what they have been in the past weeks ranging from $1.00 to $2.00 under class. This may change as the summer progresses but there is no concern over a milk shortage. The volatility of milk futures continues with the perception of traders moving futures dramatically. There was no reason for the large increase in Class III milk futures today as the strength of blocks was more than offset by the decline of barrels. Many contracts closed near the highs of the day. This would suggest there could be further follow-through buying.
AVERAGE CLASS III PRICES
| 3 Month: | $20.03 |
| 6 Month: | $20.15 |
| 9 Month: | $19.79 |
| 12 Month: | $19.53 |
CHEESE
Cheese demand is reported mixed across the country. Some manufacturers report they are not taking on any more customers as they are producing for current orders and have no room to take on any new customers. Some manufacturers report demand is improving and is running above year-earlier levels. This was indicated in the cold storage report released on Tuesday as cheese inventory declined in May with inventory below a year ago.
BUTTER
Butter production has begun to slow as cream supply is tightening. The hot weather is impacting butterfat, and the milk supply is beginning to decrease. Manufacturers have anticipated reduced production and have been actively trying to build inventory. However, the cold storage report showed butter supply only 3% above a year ago. Butter inventory should decline seasonally through the end of the year as churning slows and demand improves. The butter price moved low enough to trigger the interest of buyers today. This may carry through on Thursday with sellers holding back waiting for higher prices.
OUTSIDE MARKETS SUMMARY
July corn closed down 5.50 cents per bushel at $4.2000, November soybeans closed down 4.50 cents at $11.0700 and July soybean meal closed down $4.40 per ton at $360.90. September Chicago wheat closed steady at $5.6050. August live cattle closed up $2.33 at $186.75. August crude oil is up $0.07 per barrel at $80.90. The Dow Jones Industrial Average is up 16 points at 39,128 with the NASDAQ is up 88 points at 17,805.
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