GENERAL OVERVIEW:
Again, it was not a good day for milk futures. Class IV contracts were under substantial pressure, with July falling below $18.00. Nonfat dry milk continued to plummet.
MILK:
There is no telling how much pressure will continue to be seen in the market. Milk output continues to increase as farms expand. More milk production increases milk income and makes up for lower prices. However, it also increases expenses. That has not been a problem as the high calf prices have filled a substantial income gap. High calf prices are expected to remain, and the growth of dairy cow numbers likely will continue. Both domestic and international demand are strong, but not strong enough to tighten the market. It is uncertain as to the level milk prices will need to decline before the continued increase in cow numbers and milk production will decrease.
AVERAGE CLASS III PRICES:
| 3 Month: | $16.35 |
| 6 Month: | $17.03 |
| 9 Month: | $17.21 |
| 12 Month: | $17.26 |
CHEESE:
The block cheese price remains in a sideways pattern. There is little fundamental reason for cheese prices to increase. Manufacturers keep moving supplies to the spot market to keep inventory from building. It is interesting that even though inventory has increased during the first half of the year, the growth has not been sufficient to move supplies above those of a year ago. Demand has been good, but it has not tightened supply.
BUTTER:
The weakness of butter could indicate the potential for the price to retest the lows from the end of May. Buyers see no reason to be aggressive. Butter production remains strong with plants operating seven days a week. The cream supply has tightened but remains plentiful.
OUTSIDE MARKETS SUMMARY:
July corn closed down 1.75 cents per bushel at $4.1375, July soybeans closed up 10.75 cents at $11.3000 and July soybean meal closed up $2.80 per ton at $304.80. July Chicago wheat closed up 6.25 cents at $5.9600. August live cattle closed up $5.95 at $249.20. July crude oil is down $4.04 per barrel at $76.71. The Dow Jones Industrial Average is up 329 points at 52,000, with the NASDAQ down 308 points at 26,376.
