GENERAL OVERVIEW:
Milk futures moved relative to the direction of the underlying cash. Block cheese weakness resulted in lower Class III futures, while the strength of nonfat dry milk showed higher Class IV futures.
MILK:
There was more milk available for processing this week due to many plants running on reduced schedules over the holiday weekend. However, spot milk prices actually showed strength, ranging from $3.00 under class to as much as $2.00 over class. Reduced milk production due to the impact of hot weather has some plants reaching out to the spot market to maintain full production schedules. The milk supply has not tightened to the degree to cause supply concerns. In fact, it is not expected to reach that level even though milk production is decreasing. Increased volatility in Class III futures today did not result in greater trading volume.
AVERAGE CLASS III PRICES:
| 3 Month: | $16.17 |
| 6 Month: | $16.81 |
| 9 Month: | $16.99 |
| 12 Month: | $17.07 |
CHEESE:
The slight decrease in the block cheese price today quickly turned Class III futures lower. It is too early to tell whether the price could move back down to the level of last week or if it may be supported at a higher level. Buying interest should improve as end users look ahead to demand later in the year, even though the milk supply is sufficient for cheese production.
BUTTER:
The churning pace is beginning to decrease as the cream supply declines. There are some reports of plants moving to five days per week, which may provide support to the market as domestic retail demand and international demand remain strong. There is some concern over the export volume as the butter price at the Global Dairy Trade auction decreased 5.0% on Tuesday. The world price is still $0.77 per pound above the U.S. price, but there is concern the export pace might slow.
OUTSIDE MARKETS SUMMARY:
December corn closed down 8.00 cents per bushel at $4.5625, November soybeans closed down 5.50 cents at $11.9225, and December soybean meal closed down $5.30 per ton at $311.20. September Chicago wheat closed down 10.75 cents at $6.0775. August live cattle closed down $0.80 at $237.63. August crude oil is up $4.15 per barrel at $74.59. The Dow Jones Industrial Average is down 562 points at 52,348, with the NASDAQ up 52 points at 25,871.
