GENERAL OVERVIEW:
Milk futures took a beating again today, with Class III futures posting substantial losses. Spot prices did not show much movement, with traders focusing on the slight weakness of butter and barrels. The Global Dairy Trade auction trade-weighted average decreased 3.4%.
MILK:
Milk futures took a beating as traders were more concerned over the slight weakness of the butter and barrel cheese prices rather than the stability of block cheese and dry whey, and the increase in nonfat dry milk. The market may be overdone to the downside, and futures could bounce later this week. The Global Dairy Trade auction took place today, with the trade-weighted average declining 3.4%. This was the first decline after six consecutive events of gains. There were 16,497 metric tons sold at an average price of $4,228 per metric ton. Anhydrous milk fat declined 7.1% to $7,027 per metric ton or $3.19 per pound. Butter declined 8.1% to $6,181 per metric ton or $2.80 per pound. Buttermilk powder gained 0.7% to $3,182 per metric ton or $1.44 per pound. Cheddar cheese declined 3.1% to $4,766 per metric ton or $2.16 per pound. Lactose declined 0.6% to $1.454 per metric ton or $0.66 per pound. Skim milk powder declined 1.6% to $3,381 per metric ton or $1.53 per pound. Whole milk powder declined 0.7% to $3,687 per metric ton or $1.67 per pound. Mozzarella cheese declined 6.2% to $3,945 per metric ton or $1.79 per pound.
AVERAGE CLASS III PRICES:
| 3 Month: | $17.55 |
| 6 Month: | $18.11 |
| 9 Month: | $18.25 |
| 12 Month: | $18.11 |
CHEESE:
There is no shortage of cheese as output improves seasonally. Traders seem to think that the upside potential from here is limited. This has resulted in the liquidation of positions just in case further weakness unfolds in the next few days. It is unlikely cheese prices will fall apart, but there is no way of knowing for sure. The butter price was not expected to decline as much as it had, but it certainly did. The cheese market is not immune to further weakness.
BUTTER:
Sellers continue to offer butter on the spot market as they move supplies rather than let them increase and speculate on a price increase that may not develop. It is a buyer's market as they just need to wait for butter to be offered rather than having to bid the price higher to increase ownership.
OUTSIDE MARKETS SUMMARY:
May corn closed down 5.00 cents per bushel at $4.4900, May soybeans closed down 8.50 cents at $11.5825 and May soybean meal closed down $4.80 per ton at $311.80. May Chicago wheat closed up 2.75 cents at $5.9800. June live cattle closed down $1.23 at $245.80. May crude oil is up $0.54 per barrel at $112.95. The Dow Jones Industrial Average is down 85 points at 46,584, with the NASDAQ up 22 points at 22,018.
