OVERVIEW:
It was not a good day for Class III futures, with August Class III futures falling to a new contract low and matching the July price. This is very concerning as buyers in the spot market continue to hold back and are still able to purchase supplies without difficulty.
MILK:
There is no shortage of milk, even though milk receipts at the plant level are decreasing. This is seasonal, as summer weather affects cow comfort and reduces milk components. However, the impact is not as much as it once was due to significant improvements in cooling systems to minimize the effect of hot weather. Hotter temperatures are more frequent during July and August, which could tighten the milk supply further, but even with lower milk production, milk prices may not see much upside unless demand improves. Milk output continues to remain above a year ago as cow numbers increase and milk production per cow remains strong. Spot milk supply has tightened with prices as much as $2.00 over class. Some plants are actively looking for spot milk to maintain full production schedules.
AVERAGE CLASS III PRICES:
| 3 Month: | $17.61 |
| 6 Month: | $18.05 |
| 9 Month: | $18.00 |
| 12 Month: | $18.01 |
CHEESE:
Cheese prices have eliminated the recent gains and are now nearing the bottom of the trading range they have been in since October. The range for blocks has been from $1.5750 to $1.9550. The range for barrels was from $1.55 to $1.90. It may be difficult for cheese prices to move to the upper end of the range, much less break above it.
BUTTER:
The butter price has been holding much better than cheese, with the price near the highs of the year, and is poised to move higher as the summer progresses. Bulk butter is in strong demand. Exports of butterfat so far this year are phenomenal, up 174.7% from a year ago. Domestic demand is reported as steady.
OUTSIDE MARKETS SUMMARY:
December corn closed up 5.75 cents per bushel at $4.1800, November soybeans closed down 0.25 cent at $10.0700 and December soybean meal closed down $1.90 per ton at $281.70. September Chicago wheat closed down 3.50 cents at $5.4150. August live cattle closed down $2.85 at $219.35. August crude oil is down $1.47 per barrel at $66.98. The Dow Jones Industrial Average is up 88 points at 44,460, with the NASDAQ up 55 points at 20,640.
