MILK
Hot and humid weather is impacting milk production depending on the region. Some that have not been impacted as much are seeing production remaining flat compared to last week. Milk receipts are lower but sufficient for manufacturing needs. There is some concern that supply may tighten further as the summer progresses. This could further support milk prices if demand increases as the year progresses. Demand for all classes of milk is steady. Class III milk futures have moved to the upper end of the trading range and could retest the highs if cheese prices hold current levels. Class IV futures have been flat over the past week with little impact on prices. The decline of the butter price today did not trigger selling as traders are taking a wait-n-see attitude. Grain prices remain under pressure which will decrease feed prices and improve profitability.
AVERAGE CLASS III PRICES
| 3 Month: | $20.26 |
| 6 Month: | $20.19 |
| 9 Month: | $19.66 |
| 12 Month: | $19.36 |
CHEESE
Spot milk prices this week are running at class to $1.00 over. Lower milk production is becoming more costly for those plants that rely on spot milk to keep cheese production steady. Spot prices may increase further in the coming weeks resulting in slowing cheese production. Overall cheese demand is strong and in line with a year ago but has yet to generate aggressive buying interest in the spot market. The current high food prices may limit the seasonal increase in cheese demand leaving upside potential limited.
BUTTER
The cream supply is tightening as hot weather impacts milk production and components. Cream prices are rising and becoming too pricey for churning for some manufacturers. Some plants are looking outside of their region to purchase cream in places where it is more abundant. Butter output will decline as the summer progresses. Inventory will be used to supplement fresh production to satisfy demand.
OUTSIDE MARKETS SUMMARY
December corn closed down 1.25 cents per bushel at $4.0725, November soybeans closed down 13.00 cents at $10.6700 and December soybean meal closed down $2.30 per ton at $316.40. September Chicago wheat closed down 10.50 cents at $5.6150. August live cattle closed down $0.10 at $182.25. August crude oil is up $1.04 per barrel at $82.45. The Dow Jones Industrial Average is up 429 points at 39,721 with the NASDAQ is up 218 points at 18,647.
