MILK
Most milk futures were higher into the close. Some pressure remained on later contracts, likely due to cheese prices not holding the highs during spot trading. The June Milk Production report showed output down 0.8% and was within expectations. Milk production last week was steady and lower depending on the region and the ability to keep cows comfortable during hot weather. There is sufficient supply for bottling and manufacturing leaving the market comfortable. However, it is nearing the month of August during which buyers of cheese and butter generally become more aggressive as they prepare for Fall and holiday demand.
The August Class III September and October contracts moved solidly above $21.00 supported by further strength of cheese prices. USDA will release the June Cold Storage report which is not expected to show an inventory increase over a year ago. The June Livestock Slaughter report will be released and should reveal the slower level of dairy cattle slaughter.
AVERAGE CLASS III PRICES
| 3 Month: | $20.49 |
| 6 Month: | $20.45 |
| 9 Month: | $19.85 |
| 12 Month: | $19.45 |
CHEESE
Cheese production has been running steadily in previous weeks as plants receive sufficient supply to keep production schedules full. The milk supply has tightened with spot milk prices steady with class to as much as $1.50 above. Plants are not receiving calls offering extra milk but need to call around to find what they need. Spot cheese prices have increased this week but remain in the recent sideways trading range. Prices may have reached a level at which selling may become more aggressive.
BUTTER
Buyers have not turned aggressive but may feel the price may not decline further. This could result in more aggressive buying as they take advantage of the lower price. Retail and food service demand has been flat recently. Spot butter price reflects this demand leaving the buyers complacent. The tightening milk supply has reduced the availability of cream for churning.
OUTSIDE MARKETS SUMMARY
December corn closed up .75 cent per bushel at $4.1800, November soybeans closed down 11.50 cents at $10.6400 and December soybean meal closed up $1.50 per ton at $320.60. September Chicago wheat closed up 4.25 cents at $5.4700. October live cattle closed up $0.15 at $186.28. September crude oil is up $0.63 per barrel at $77.59. The Dow Jones Industrial Average is down 504 points at 39,854 with the NASDAQ down 655 points at 17,324.
