With lower prices comes exports, but will the increased interests in the Asian markets offset lackluster demand domestically? Steady to lower is the current market trend. As grains continue to drop, cost of production will ease, and there will not be as much incentive to cull the herd. Milk production is still at very high levels despite the heat in the Upper Midwest and West Coast. With May milk production up 4.6 percent, the class 3 market will need a big uptick in demand to right this ship.
Spot Market Recap
Cheese makers are receiving plenty of milk nationwide. Spot milk prices were between $4 to $6 under class 3, and production schedules are running at full capacity. Inventory is not building up as spot loads of cheese are moving quickly. There is a renewed strength in the Asian markets with the price of cheese below the rest of the world. Retail demand has not picked back up with grilling season. Food service has stabilized as buyers step back in to refill coolers. At the current market prices the market tone is mixed.
Butter markets are working through ample milk and cream supplies. Inventories are available for spot sales. Retail market is soft this week but many grocery stores are featuring butter promotions. Food service is steady as restaurants refill their pipe lines. Bulk butter is ranging from 1.5 to 8 cents above cash. Overall butter market tone is stable
Dry Whey prices slipped this week as producers try to move more product. Buyers have been hesitant to take on extra loads above the 60 cent mark. Inventories have grown and spot loads are available. With more milk running through cheese vats, dry whey production is strong.
With no slowdown in sight for milk production and inventories building, the overall class 3 outlook is starting to look more bearish. The one bright spot has been exports the last couple of weeks, but at this time they are not enough to push prices higher. I would look to put spreads as we have already dropped from the highs. A pickup in demand or drop in production could turn this ship around. With the 4th of July weekend next week we will not have a report. Have a fun and safe 4th and throw an extra piece of cheese on your burger this next weekend.