GENERAL OVERVIEW:
Class III and IV futures diverged, with Class III contracts higher while Class IV contracts declined. The Global Dairy Trade auction trade-weighted average declined by 4.9%.
MILK:
Class III milk futures received a little boost today. Traders responded to the increase in cheese prices. However, the gains were limited as traders are uncertain over the duration of the strength. More aggressive buying could be from the hotter weather predicted in many areas as well as the strong gains in grain prices over the past two days. There has always been a correlation between the corn price and the milk price. This correlation does not follow immediately and in all cases, but when traders are looking for something to move the market, this could be it. The Global Dairy Trade auction took place today, with the trade-weighted average declining 4.9% from the previous event. There were 26,316 metric tons sold at an average price of $3,793 per metric ton. This was an unusually large amount and about double what it has been the past few events. The anhydrous milk fat price decreased 3.9% to $6,341 per metric ton or $2.88 per pound. Butter declined 5.0% to $5,336 per metric ton or $2.42 per pound. Buttermilk powder gained 8.2% to $3,786 per metric ton or $1.72 per pound. Cheddar cheese fell 12.3% to $3,900 per metric ton or $1.77 per pound. Lactose declined 3.6% to $1,732 per metric ton or $0.79 per pound. Skim milk powder declined 7.0% to $3,135 per metric ton or $1.42 per pound. Whole milk powder declined 4.4% to $3,425 per metric ton or $1.55 per pound. Mozzarella cheese gained 3.8% to $3,897 per metric ton or $1.77 per pound.
AVERAGE CLASS III PRICES:
| 3 Month: | $16.29 |
| 6 Month: | $16.90 |
| 9 Month: | $17.05 |
| 12 Month: | $17.12 |
CHEESE:
The strength of spot cheese prices was a little surprising due to sufficient supplies available to the market. Buyers were aggressive in purchasing what was offered even at higher prices. To end-users, it might have made sense to purchase at the lower prices rather than risk waiting and end up paying more for cheese later. There is a time when reasonable prices need to be taken advantage of rather than guessing the strength of the market.
BUTTER:
There was no trading activity, leaving the price unchanged from Monday. The 25 uncovered offers remaining at the close suggest limited upside price potential in the near term.
OUTSIDE MARKETS SUMMARY:
December corn closed up 6.50 cents per bushel at $4.6425, November soybeans closed up 5.50 cents at $11.9775, and December soybean meal closed up $3.00 per ton at $316.50. September Chicago wheat closed up 4.50 cents at $6.1850. August live cattle closed down $0.68 at $238.43. August crude oil is up $3.37 per barrel at $71.92. The Dow Jones Industrial Average is down 131 points at 52,925, with the NASDAQ down 302 points at 25,819.
