MILK
The one aspect that is very positive to the market is that feed prices continue to decline. That will improve income over feed if milk prices remain at the current level milk prices are trading. It will be important for farmers who need to purchase feed this year to watch grain market fundamentals for good prices to hedge feed for the year. The crops are in good condition. Corn is in 68% good/excellent condition compared to 57% a year ago. Soybeans are 68% in good/excellent condition compared to 55% a year ago. Further weakness in grain prices is expected, but support will be found later. Historically, milk prices tend to follow the direction of corn over time. It may be somewhat decoupled this year as milk production is lower than last year and heifer replacements are tighter. Currently, there is sufficient milk available for demand.
AVERAGE CLASS III PRICES
| 3 Month: | $19.91 |
| 6 Month: | $19.90 |
| 9 Month: | $19.45 |
| 12 Month: | $19.18 |
CHEESE
Barrels moved back above blocks today as the market remains choppy. This pattern is expected to continue as buyers and sellers continue to do business as they require. Cheese inventory is not burdensome but sufficient for demand. Inventory generally decreases during the second half of the year as demand improves.
BUTTER
Buyer interest was strong today with 24 loads changing hands during spot trading. Lower prices increase the buying interest providing support to the market. The cream supply is tightening with prices increasing. Many plants feel they are priced out of buying cream for churning and are reducing production schedules rather than paying higher prices. Plants are scheduling some downtime for maintenance with some selling a portion of their cream rather than churning.
OUTSIDE MARKETS SUMMARY
December corn closed down 10.50 cents per bushel at $4.0425, November soybeans closed down 25.25 cents at $10.4000 and December soybean meal closed down $5.80 per ton at $308.30. September Chicago wheat closed down 18.25 cents at $5.3250. August live cattle closed down $0.25 at $182.13. August crude oil is down $0.20 per barrel at $82.01. The Dow Jones Industrial Average is up 211 points at 40,212 with the NASDAQ is up 74 points at 18,473.
