GENERAL OVERVIEW:
Class III futures showed a solid day with August, September, and October contracts up sharply. Class IV futures moved in the other direction from weakness in spot butter and nonfat dry milk. Cheese prices seem to have found support for the time being.
MILK:
Milk production has slowed due to the hot weather, but lower temperatures are forecast, which should improve cow comfort. Whether milk production will rebound near the levels it had been ahead of the hot weather remains to be seen. The decrease in milk production during this time of year is usual and not a surprise. It does seem to have provided support to cheese prices, which will support higher milk prices. There remains uncertainty over the upside potential of prices. The July Class III contract is mostly priced at $15.73. The current August price is nearly $2.00 higher and hopefully will maintain that level. The July Class IV futures are $18.40, with the August price nearly $1.00 lower. The significant increase in futures today with minimal price movement in spot prices may trigger some profit taking on Friday as traders position ahead of the weekend.
AVERAGE CLASS III PRICES:
| 3 Month: | $17.11 |
| 6 Month: | $17.55 |
| 9 Month: | $17.52 |
| 12 Month: | $17.52 |
CHEESE:
Even though milk production has declined, cheese production remains steady. Some plants are making up the decline by purchasing spot milk to supplement lower milk receipts, even though they may need to pay prices above class. Keeping plants running near full capacity maintains efficiency.
BUTTER:
Cream supplies have decreased due to lower butterfat content and increased production of Class II products such as ice cream. Unsalted butter inventories have tightened while salted butter supplies are sufficient. Some plants are scheduling downtime for maintenance as production levels decline.
OUTSIDE MARKETS SUMMARY:
December corn closed down 5.50 cents per bushel at $4.6400, November soybeans closed down 6.75 cents at $11.9500, and December soybean meal closed up $2.40 per ton at $322.40. September Chicago wheat closed down 2.75 cents at $6.7475. August live cattle closed down $3.05 at $227.08. August crude oil is down $0.05 per barrel at $79.55. The Dow Jones Industrial Average is down 106 points at 52,553, with the NASDAQ down 3,867 points at 25,882.
