GENERAL OVERVIEW:
Milk futures closed steady to higher, with some thought that buyers may turn a bit more aggressive as the second half of the year unfolds. That would be based on seasonality and not a noticeable change in fundamentals.
MILK:
The beginning of the second half of the year came without much fanfare. It is uncertain as to the extent hot weather will play in the milk supply, but it is never a good idea to plan marketing strategies based on a potential impact on milk production. Even if weather impacts milk production, increased cow numbers and better facilities are likely to keep milk output above a year ago. The key to cows holding milk production is the duration of hot weather. Cows generally bounce back quickly if it lasts a short period of hot weather. Class III futures maintain some premium in subsequent months. Class IV futures carry virtually no premium throughout the first half of next year. There is little expectation for the nonfat dry milk price to see upside potential.
AVERAGE CLASS III PRICES:
| 3 Month: | $16.16 |
| 6 Month: | $16.82 |
| 9 Month: | $16.99 |
| 12 Month: | $17.08 |
CHEESE:
Milk output has declined from its peak but remains higher than a year ago. This keeps sufficient milk available to the vat with plants running on full schedules. Cheese buyers should turn more aggressive as they look ahead and prepare for later demand. However, buyers are not concerned over the cheese supply at the current time. Buyers are not interested in aggressively building inventory.
BUTTER:
The butter price may find support and hold at the current level or higher now that increased temperatures are impacting butterfat levels. International demand remains strong.
OUTSIDE MARKETS SUMMARY:
December corn closed up 16.25 cents per bushel at $4.5775, November soybeans closed up 44.50 cents at $11.9225, and December soybean meal closed up $9.10 per ton at $313.50. September Chicago wheat closed up 14.25 cents at $6.1400. August live cattle closed down $0.13 at $239.10. August crude oil is down $0.07 per barrel at $68.62. The Dow Jones Industrial Average is up 156 points at 53,056, with the NASDAQ up 288 points at 26,1221.
