OVERVIEW:
Class III milk futures reversed Monday's gains and then some as traders showed no support from the higher barrel cheese price. Fluid milk sales declined 0.9% in May, continuing the trend of lower fluid consumption.
MILK:
An increase in the barrel cheese price should have provided support for the market, but it was not enough to override the volume of blocks trading without the price increasing. Traders do not seem to like steady spot prices on the idea that it indicates limited price potential. The August contract is again moving closer to the $17.00 price level and hopefully will remain above that level.
Fluid milk consumption continues to decline, with fluid milk sales in May at 0.9% below May 2024. Conventional whole milk sales increased 2.1%; flavored whole milk increased 6.3%; reduced-fat fat decreased 2.7%; low-fat milk decreased 5.5%; fat-free skim milk decreased 5.3%; flavored fat-reduced milk decreased 8.8%; buttermilk decreased 2.0%, with other fluid milk production sales increasing 17.8%. Organic whole milk sales increased 0.9%; organic flavored whole milk increased 3.5%; organic reduced-fat milk sales decreased 6.2%; organic low-fat milk fell 20.3%; organic fat-free skim increased 4.4%; organic flavored fat-reduced milk fell 35.2%, with other organic fluid milk products falling 46.1%.
AVERAGE CLASS III PRICES:
| 3 Month: | $17.50 |
| 6 Month: | $17.72 |
| 9 Month: | $17.74 |
| 12 Month: | $17.79 |
CHEESE:
At least the block cheese price held despite 13 loads being traded. The buyers could have stepped back to see if the price was going to weaken, but such was not the case. The buyers took advantage of the loads being offered without having to chase the market higher. Cheese production remains strong as milk production is higher than a year ago. There are some locations indicating tighter milk supplies, which is reflected in spot milk prices. However, milk is available and can be obtained without difficulty.
BUTTER:
The butter price is expected to increase seasonally, but the increase may be minimal under the current fundamentals. Cream supplies are not as abundant as they have been, but remain sufficient for production to meet demand. Some butter manufacturers are selling cream due to higher prices rather than churning. The production of other Class II products is utilizing large volumes of cream.
OUTSIDE MARKETS SUMMARY:
December corn closed down 3.00 cents per bushel at $4.1100, November soybeans closed down 2.00 cents at $10.0950 and December soybean meal closed down $2.80 per ton at $276.50. September Chicago wheat closed down 8.75 cents at $5.2975. October live cattle closed up $1.68 at $226.45. September crude oil is up $2.50 per barrel at $69.21. The Dow Jones Industrial Average is down 205 points at 44,633, with the NASDAQ down 80 points at 21,098.
