OVERVIEW:
Class III futures closed mixed, while Class IV contracts showed no trading activity throughout the day. The June Livestock Slaughter report showed slaughter declining from May but slightly higher than a year ago.
MILK:
Trading activity was moderate in Class III futures, with greater activity in the nearby contracts as usual. Class IV futures showed no trading activity throughout the day. The minor increase in the block cheese price had little impact on milk futures. Traders supported contracts through the rest of the year because futures were overdone to the downside. The June Livestock Slaughter report was released, showing dairy cattle slaughter totaling 188,800 head. This was 7,900 head lower than May, but 2,400 head more than a year ago. This was the first time slaughter exceeded the previous year after 21 consecutive months of reduced slaughter. Though slaughter was higher than a year ago, the amount of dairy cattle slaughtered was historically low. Except for June 2024, the last time slaughter was below 190,000 head was in June 2008. The biannual Cattle Inventory report will be released on Friday Afternoon. The estimate for the inventory of milk cows on July 1 is 100.5% above two years ago. It will be compared to two years ago due to the report not being available last year. Interestingly, the number of milk replacement heifers is estimated to be 100.6% above a year ago.
AVERAGE CLASS III PRICES:
| 3 Month: | $17.38 |
| 6 Month: | $17.78 |
| 9 Month: | $17.77 |
| 12 Month: | $17.83 |
CHEESE:
The minor increase in the block cheese price had little influence on the market. Traders will need to see further strength before they become more aggressive buyers. Even with that, the market will need to prove itself as milk production is significantly above a year ago. Demand will need to improve significantly the rest of the year to utilize the higher production of cheese and support prices. That seems like a tall order under the present market conditions.
BUTTER:
The butter price held today, but it is uncertain whether the weakness has run its course, and buyers will step up more aggressively or whether they will remain on the sidelines and purchase only on price weakness. The USDA will release the June Cold Storage report on Friday. Butter inventory is expected to be lower than a year ago but is not expected to be bullish for the market.
OUTSIDE MARKETS SUMMARY:
December corn closed up 3.25 cents per bushel at $4.2075, November soybeans closed up 1.50 cents at $10.2425 and December soybean meal closed down $2.50 per ton at $283.10. September Chicago wheat closed up 1.00 cent at $5.4150. October live cattle closed down $1.35 at $222.15. September crude oil is up $0.91 per barrel at $66.16. The Dow Jones Industrial Average is down 316 points at 44,694, with the NASDAQ up 38 points at 21,058.
