OVERVIEW:
Milk futures took a hit with Class III and Class IV contracts down nearly the same amount. The weakness of the underlying cash price at this time of year does not bode well for milk prices the rest of the year.
MILK:
Even though milk production has decreased due to increased temperature, it remains higher than a year ago. Cooler weather recently should improve cow comfort and milk production per cow. Milk components continue to remain higher than a year ago, improving cheese yield and providing cream for Class II dairy product production. So far, milk supplies have kept pace with demand. The demand for beef on dairy calves is exceptional, with high prices being paid. Feedlots are aggressively looking for calves and, in many cases, are paying higher prices than what the futures market is showing. As long as this continues, cow numbers will remain elevated as farmers hold cows to produce milk to improve cash flow.
AVERAGE CLASS III PRICES:
| 3 Month: | $17.81 |
| 6 Month: | $17.72 |
| 9 Month: | $17.69 |
| 12 Month: | $17.73 |
CHEESE:
Spot milk prices have increased, with milk available at class to $2.00 above. Milk moving to school accounts has tightened the available supply for manufacturing, resulting in higher spot prices. Cheese production is keeping up with demand, minimizing the decrease in inventory.
BUTTER:
Butter fell to a new low for the year and the lowest price since Dec. 9, 2021. This makes it more difficult to see much upside potential for the price anytime soon. Even if the price rallies, it will begin from a very low price. It is concerning that an underlying bid was placed during spot trading at $1.69. Many times, extreme bids or offers will be where the market eventually goes.
OUTSIDE MARKETS SUMMARY:
December corn closed down 3.50 cents per bushel at $4.0600, November soybeans closed down 2.00 cents at $10.4750 and December soybean meal closed down $5.10 per ton at $288.20. December Chicago wheat closed down 7.50 cents at $5.2425. October live cattle closed up $1.33 at $239.53. October crude oil is up $0.90 per barrel at $64.15. The Dow Jones Industrial Average is up 147 points at 45,565, with the NASDAQ up 46 points at 21,590.
