GENERAL OVERVIEW:
Milk futures closed lower again in response to the weakness of dry whey, butter, and block cheese. Class III futures are not far from eliminating all of the gains since July 6. Class IV futures have moved back to the levels last seen in January. The Cattle Inventory report showed more heifers.
MILK:
After the milk production report last week, there is no real reason for milk futures to remain higher or carry much extra premium. Milk production remains above a year ago with cow numbers increasing. The biannual Cattle Inventory report showed dairy cow numbers as of July 1 at 9.650 million head. This was 2% higher than July 2025. Replacement heifers totaled 3.600 million head, up 3% from July 2025. The percentage of replacement heifers to milk cows is 37.3&. This is historically low, but slightly higher than July 2025 and July 2023. Even though more cattle are bred with beef on dairy, sufficient heifers are being produced to maintain and grow the dairy herd. Cows are increasing in longevity as improved genetics and management practices are increasing productivity.
AVERAGE CLASS III PRICES:
| 3 Month: | $16.56 |
| 6 Month: | $17.03 |
| 9 Month: | $17.17 |
| 12 Month: | $17.28 |
CHEESE:
Buyers of cheese may hold back after immediate demand has been filled, milk production remains strong, and inventory remains stable. The concern that had developed due to the impact of hot weather seems to have been digested, and determined that milk supplies will not tighten. The concern is that cheese prices may follow the pattern of the last time prices were at these levels. Prices fell back significantly as buyers became less aggressive.
BUTTER:
The butter price has now bypassed the low of June 23rd and declined to the lowest level since January 22nd. Surprisingly, buyers have not increased their desire to build inventory at the low level. The cold storage report showed inventory in June was 7% below a year ago. Seasonal buying should increase at some point.
OUTSIDE MARKETS SUMMARY:
December corn closed down 13.50 cents per bushel at $4.7400, November soybeans closed down 39.75 cents at $12.1375 and December soybean meal closed down $11.10 per ton at $324.10. September Chicago wheat closed down 18.00 cents at $6.6000.
October live cattle closed down $3.73 at $218.78. September crude oil is down $7.49 per barrel at $81.82. The Dow Jones Industrial Average is up 263 points at 52,210, with the NASDAQ down 44 points at 24,932.
