GENERAL OVERVIEW:
Class III futures were mixed while Class IV futures increased, with most contracts posting double-digit gains. Market fundamentals remain as they have been during the past weeks. Weather remains mostly favorable for cow comfort.
MILK:
Milk production is mostly steady at a higher level than a year ago. The spring flush continues with good weather for cow comfort. There are many discussions over whether the trend for increasing cow numbers will continue or whether cows have been held onto for calves. Once those calves are born, they will be culled. Strong output per cow does not suggest there are many cows being held onto only to obtain their calves. Otherwise, we would see milk production per cow decrease, but that has not been the case. With the current milk prices and high calf prices, cow numbers are likely to be maintained or increase further, as increased culling is not necessary to improve cash flow. If milk production this year ends as the USDA estimated on their recent World Agricultural Supply and Demand report, it would be an increase of 3.7 billion pounds from 2025.
AVERAGE CLASS III PRICES:
| 3 Month: | $17.39 |
| 6 Month: | $18.00 |
| 9 Month: | $18.00 |
| 12 Month: | $17.99 |
CHEESE:
Retail demand for cheese is strong and keeps cheese moving, preventing inventory from building. However, food service demand is slower than anticipated for this time of year. Higher fuel prices and increased costs for goods and services are impacting restaurant traffic to some extent. The spot milk supply has tightened to some extent this week, with spot prices ranging from $4.00 under class to $2.00 over class. That is expected to change as schools close for the summer and more milk becomes available for manufacturing.
BUTTER:
The weakness in the butter price was a disappointment today. There had been hope that support might develop under the market, and the price could slowly trend higher. However, the weakness today may have traders questioning whether that is the case. The fact that there were 19 uncovered offers at the close of spot trading suggests upside price potential may be limited.
OUTSIDE MARKETS SUMMARY:
July corn closed up .75 cent per bushel at $4.8075, July soybeans closed up 2.25 cents at $12.2900, and July soybean meal closed up $10.10 per ton at $338.50. July Chicago wheat closed down 3.50 cents at $6.7550. June live cattle closed up $5.10 at $252.80. June crude oil is down $1.32 per barrel at $100.86. The Dow Jones Industrial Average is down 63 points at 49,693, with the NASDAQ up 314 points at 26,402.
