MILK
The outlook for milk prices continues to improve as reduced milk production and the time of year have increased the optimism for price potential. Traders have turned their attention to futures contracts later in the year and the first quarter of 2025 reducing some of the discounts that had been prevalent. Futures still retain a seasonal discount, but stronger prices are expected. Class III and Class IV futures are closely priced for the next few months, but Class IV futures hold a significant premium to Class III in 2025. Lower grain prices generally have an impact on milk production and milk prices. There are other factors prevalent that may delay that correlation in the foreseeable future. A tight heifer market is having an impact on the physical and psychological aspects of the market. Farmers culling fewer cows will leave older and lower-producing cows in the herds. That gives the impression milk production will be lower even if more cows remain in the national herd. That may impact the production and availability of milk for bottling and manufacturing. Improving demand should support prices. The USDA will release the July Agricultural Prices report on Friday providing the average price used to calculate income over feed.
AVERAGE CLASS III PRICES
| 3 Month: | $21.84 |
| 6 Month: | $21.61 |
| 9 Month: | $20.80 |
| 12 Month: | $20.34 |
CHEESE
The supply/demand balance is shifting a little to a tighter supply. This has resulted in a growing bullish attitude in the market. Even though the block cheese price did not hold initial gains during spot trading and barrels regained only about a third of yesterday's losses, milk futures posted significant gains. Milk flowing to the cheese vat is reduced and expected to remain that way for the foreseeable future.
BUTTER
Bulk butter production in the West is steady with cream readily available. Demand is slowly improving across the country as buyers increase ownership to supply previously made contracts and build supply for upcoming demand. There is a sufficient supply of inventory, but prices may continue to trend higher as demand may reduce inventory more than usual.
OUTSIDE MARKETS SUMMARY
December corn closed up 5.25 cents per bushel at $3.9600, November soybeans closed up 15.50 cents at $9.9250 and December soybean meal closed up $2.60 per ton at $310.90. December Chicago wheat closed up 7.25 cents at $5.4875. October live cattle closed down $0.73 at $177.90. October crude oil is up $1.39 per barrel at $75.91. The Dow Jones Industrial Average is up 244 points at 41,335 with the NASDAQ down 40 points at 17,516.
