GENERAL OVERVIEW:
It was a rough day for Class IV futures, with contracts declining substantially. The large decline in nonfat milk triggered liquidation in a thinly traded market. The decline in nonfat dry milk was the second-largest decline since the market peak.
MILK:
Sometimes, there have been glimmers of hope that maybe the market has found support in seasonality and demand. Those hopes have been temporary, with the aftermath being more bearish than previously. Two weeks ago, Class IV futures rebounded, looking as if support may have been found. That was eliminated over the past week, with prices plummeting today. The decline in spot Grade A nonfat dry milk was the second-largest one-day decline since the market peaked on May 7. The price has declined 39.75 cents since the record high that day. We are again seeing that the market always falls faster than it increases. The price increased until there was demand destruction, resulting in buyers stepping back. The same holds in all markets as high prices cure high prices. The unusual is taking place in the milk market, as low milk prices are not reducing milk production as is usually the case. Milk production is increasing as cow numbers grow. Revenue other than for milk is fueling the increase in milk output and further expansions.
AVERAGE CLASS III PRICES:
| 3 Month: | $16.66 |
| 6 Month: | $17.38 |
| 9 Month: | $17.49 |
| 12 Month: | $17.49 |
CHEESE:
Demand is improving and so is supply. It is keeping pace with one another, keeping spot cheese prices in a range. Spot cheese prices remained unchanged, but there were 12 uncovered offers remaining for blocks at the close of trading. Manufacturers want to limit the build-up of inventory and will continue to offer cheese to the market.
BUTTER:
The uptrend in the butter price has stalled and has been moving sideways. This could lead to buyers stepping back as they see sufficient butter supplies. Consistent butter production due to churns operating seven days a week will keep butter readily available to the market.
OUTSIDE MARKETS SUMMARY:
July corn closed up .75 cent per bushel at $4.1950, July soybeans closed down 2.00 cents at $11.1375, and July soybean meal closed down $1.60 per ton at $301.10. July Chicago wheat closed up 2.00 cents at $5.8525. August live cattle closed up $2.98 at $239.70. July crude oil is down $3.10 per barrel at $88.20. The Dow Jones Industrial Average is up 86 points at 50,872, with the NASDAQ down 251 points at 25,679.
