GENERAL OVERVIEW:
Steady milk production keeps a sufficient supply for manufacturing, leaving little reason for spot prices to increase. Cheese buyers had no interest in supporting spot prices today. Butter was better but did not generate substantial support in futures.
MILK:
Milk output in the Western region remains stable. There have not been large swings in milk production, leaving a sufficient supply on the spot market. This sufficient supply will keep the upside price potential limited. It was hoped that demand would improve and prices would find support. That may yet take place, but certainly not in the near term. The drop in cheese prices today indicates the markets may remain entrenched in a sideways pattern. The May contracts are mostly priced and will move sideways with limited movement after this week. June Class III futures have been decreasing to eliminate the premium they had contained in anticipation of higher prices. June Class IV futures have been holding as the underlying cash is supporting the market.
AVERAGE CLASS III PRICES:
| 3 Month: | $17.27 |
| 6 Month: | $17.93 |
| 9 Month: | $18.06 |
| 12 Month: | $17.98 |
CHEESE:
The substantial decline in the block cheese price was unexpected, as the market had been trading in a tight sideways range. The price has moved down near the bottom of the wider trading range that has been in place since mid-March. Class III futures held well despite the decline as traders continue to do day or short-term trading, reducing the need for substantial liquidation. Demand for spot milk from cheese manufacturers varies depending on location and cheese varieties.
BUTTER:
Buyers were aggressive in the spot butter market, but there is little reason for buyers to remain aggressive for an extended period. At least, the price has not moved down to retest the lows. All the uncovered offers from Wednesday were purchased, and more, with only one offer remaining at the close today. However, this does not mean the market will move higher on Friday. It will depend on who needs to take care of business and how aggressive they will be.
OUTSIDE MARKETS SUMMARY:
July corn closed down 13.25 cents per bushel at $4.6750, July soybeans closed down 36.50 cents at $11.9250, and July soybean meal closed down $6.00 per ton at $332.50. July Chicago wheat closed down 17.50 cents at $6.5800. June live cattle closed down $0.73 at $252.08. June crude oil is up $0.99 per barrel at $102.01. The Dow Jones Industrial Average is up 370 points at 50,063, with the NASDAQ up 233 points at 26,635.
