OVERVIEW:
Milk futures moved higher in response to the strength of the underlying cash. Class III futures were unable to hold the highs but posted double-digit gains in the September through December contracts.
MILK:
Milk futures have regained most of the losses from earlier last week. Seasonal buying has surfaced and may indicate that price breaks will be buying opportunities. Milk production has been impacted by hot weather, but overall production remains higher than a year ago.
USDA will release the July Milk Production report on Thursday, which should show strong gains over a year ago. Milk prices historically reach a peak in September or October as strong buying for the holidays runs its course. That is not very far away, as the calendar is nearing September. More milk is moving to school accounts as they start up for another year. This will reduce milk supplies for manufacturing but is not expected to tighten the market substantially.
AVERAGE CLASS III PRICES:
| 3 Month: | $17.95 |
| 6 Month: | $17.96 |
| 9 Month: | $17.91 |
| 12 Month: | $17.93 |
CHEESE:
Cheese prices rebounded nicely but did not regain the losses at the end of last week. Both blocks and barrels remain in a large sideways trading pattern that has developed since November and have not been able to break out of that range. There is a strong chance it could break out of the top of the range before seasonal buying runs its course.
BUTTER:
Butter may have established a low with buyers wanting to purchase supplies at the best price possible, rather than sitting on the sidelines waiting for another retracement that may not take place before buying for the end of the year is completed. Even though supplies may be sufficient for demand, buying may remain active to avoid paying higher prices later.
OUTSIDE MARKETS SUMMARY:
December corn closed up 1.25 cents per bushel at $4.0650, November soybeans closed down 1.25 cents at $10.4125 and December soybean meal closed down $2.70 per ton at $291.80. September Chicago wheat closed down 3.75 cents at $5.0275. October live cattle closed up $0.53 at $231.18. September crude oil is up $0.55 per barrel at $63.35. The Dow Jones Industrial Average is down 34 points at 44,912, with the NASDAQ up 7 points at 21,630.
