MILK
Class III milk futures did not find strong buying interest from traders with most contracts lower. The limited strength of spot cheese may cause traders to hold back on their bullish enthusiasm. Milk production continues to slow along seasonal lines as summer weather impacts cow comfort. More milk is moving from the Midwest to the Southeast to increase the supply for bottling as schools are or will be back in session for the year. This is not expected to create a shortage but may increase spot milk prices for manufacturers. This is causing some concern as schools in many other areas of the country will be in session over the next three weeks requiring more milk for bottling and tighter supplies for manufacturing. There has been greater interest by traders in purchasing deferred contracts in anticipation of higher milk prices continuing into next year.
AVERAGE CLASS III PRICES
| 3 Month: | $21.09 |
| 6 Month: | $20.57 |
| 9 Month: | $19.90 |
| 12 Month: | $19.54 |
CHEESE
Manufacturers report that milk supplies are tightening weekly. Spot milk prices this week remain similar to last week and to a year ago with prices at class up to $2.00 above. Spot milk prices are expected to increase over the next weeks as more milk moves to bottling for school accounts. Spot cheese prices above $2.00 with barrels at the highest level in over two years indicate there is potential for milk prices to increase further over the next few months.
BUTTER
The butter supply is in a different posture with inventory higher than a year ago. Churning remains sufficient to keep demand satisfied. The large increase in butterfat exports in June indicates international demand may be improving. Of course, we need to keep in mind that last year's exports were slow resulting in gains being magnified. Buyers may become more aggressive over the next weeks as buyers prepare for fourth-quarter demand.
OUTSIDE MARKETS SUMMARY
December corn closed up 3.50 cents per bushel at $4.0075, November soybeans closed up 6.00 cents at $9.6850 and December soybean meal closed up $4.50 per ton at $303.70. September Chicago wheat closed up 6.00 cents at $5.3475. October live cattle closed up $1.38 at $182.13. September crude oil is down $1.13 per barrel at $77.22. The Dow Jones Industrial Average is up 243 points at 40,008 with the NASDAQ up 5 points at 17,193.
