OVERVIEW:
Class III futures finally showed strength, but the potential for the market to continue higher may not be very great unless there is a significant change in fundamentals. Traders short-covered due to cheese prices holding.
MILK:
Milk production has been seeing rising temperatures, which have impacted cow comfort. However, even with reduced volumes coming from farms, milk production remains above a year ago. Class 1 bottling is steady in line with recent weeks. Ice cream production is increasing as temperatures increase. Class III futures finally bounced as short-covering took place due to cheese prices remaining steady. This does not indicate the market is ready to trend higher, but traders wanted to liquidate their previously sold positions just in case. Nearby contracts showed further strength in late trading after the prices were settled for the day. The CME settles futures contracts shortly after 2:00 p.m. CDT, even though trading continues until 4:00 p.m. CDT. That is the reason futures prices near the close may not always be the settlement prices. This is a standard for the futures market for all contracts that trade until 4:00 pm CDT. The thing to remember is that the strength or weakness of prices into the close generally indicates how the market will open and trade during the night.
AVERAGE CLASS III PRICES:
| 3 Month: | $17.78 |
| 6 Month: | $18.18 |
| 9 Month: | $18.11 |
| 12 Month: | $18.09 |
CHEESE:
More spot milk was available in the Central region due to some plants scheduling downtime for maintenance. Spot milk last week ranged from $3.00 below class to flat class. This is not expected to be maintained as spot milk is again expected to move above class as the summer progresses.
BUTTER:
Cream demand from other Class II products is increasing, reducing the amount available for butter production and slowing production schedules. Butter output remains sufficient for demand. Buyers have been able to purchase some supplies ahead as manufacturers have been aggressively selling butter over the past months.
OUTSIDE MARKETS SUMMARY:
December corn closed up 4.25 cents per bushel at $4.2400, November soybeans closed up 18.75 cents at $10.2050 and December soybean meal closed up $4.00 per ton at $283.50. September Chicago wheat closed up 3.25 cents at $5.4125. August live cattle closed up $1.50 at $223.90. August crude oil is up $0.12 per barrel at $66.64. The Dow Jones Industrial Average is up 231 points at 44,255, with the NASDAQ up 53 points at 20,730.
