Editor’s note: The following are available market reports and futures data as of June 19, 2009.

Butter
Cash butter pricing at the Chicago Mercantile Exchange (CME) continues to edge lower. On June 15, the Kansas City Commodity Office announced that all of the butter purchased under the dairy support program earlier in the year, 4,639,010 pounds, was sold back to the trade under invitation #1. Prices for this sellback ranged from $1.1581 to 1.1750 per pound and averaged $1.1641 per pound. Current churning schedules across the country are seasonally active, although trending lower as cream volumes become more competitive. Many butter producers continue to indicate that current churning is often heavier than demand, thus surplus volumes are clearing to inventory for future use, although these inventory clearances are declining.

Cheese
The CME Group cash cheese market was weak. Both block and barrel prices are again below the dairy product support prices of $1.10 per pound for barrels and $1.13 for blocks. Cheese production and offerings remain heavy with most manufacturing plants operating on extended schedules to clear the milk supplies. Most buyers have built inventories and are less aggressive in adding stocks or replacing depleted inventory with prices declining. Retail promotions continue to stimulate sales in selected markets. Wet, cool weather has hurt food service orders from some summer vacation locations. The Kansas City Commodity Office is seeking 3 million pounds of barrels for August through December delivery.

Fluid milk
Milk intakes are declining throughout much of the Southeast as well as California and much of the Southwest. In the Upper Midwest and Northeast, cool temperatures have provided near ideal conditions for milk production. Most northern locations have peaked for the year, but declines from the peak have been minimal. Manufacturing plants are operating on heavy seasonal schedules as the last remaining schools shutter for summer, reducing fluid demand. Lower retail milk prices, at least when featured, have helped stimulate sales.

Dry products
Buttermilk is mixed with prices mostly steady. Spot offerings remain limited. Some producers are still catching up on past orders before making new sales. Whey is steady to firm. Customers are interested in adding loads though spot offerings are few. Drying is active. The lactose market is firm. Interest has improved and prices are edging higher. The WPC market is steady. Producers’ stocks are about in balance though production is steady.

CCC price support purchases (FSA)
During the week of June 15-19, CCC net purchases totaled 7,925,262 pounds of nonfortified NDM under the dairy price support program. This brings cumulative total purchases since October 1 to 258,355,104 pounds.

Federal milk order advance prices (dairy programs)
Under the Federal milk order pricing system, the base price for Class I milk for July 2009 is $10.26, up 18 cents from June. This price is derived from the advanced Class IV skim milk pricing factor of $6.03 and the advanced butterfat pricing factor of $1.2682 per pound. Class I differentials specific to each county are added to the base price to determine the Class I price. The Class II skim milk price for July is $6.73 and the Class II nonfat solids price is $0.7478 per pound.

Dairy outlook (ERS)
Production is being reined in as the dairy herd size is contracting. Production per cow on a daily basis has ranged above year-earlier levels in the first four months of 2009. Feed prices this year are projected to be below 2008’s lofty highs, but still above those in 2007. Culling will likely be above average as a result of weak returns to producers. Domestic commercial use on a fat basis is forecast to rise in 2009 to 186.1 billion pounds, up 1 percent from 2008, but to remain virtually unchanged in 2010. Dairy product prices are forecast to rise. The Class IV price is projected to average $10.10 to $10.60 per hundredweight this year and $12.55 to $13.65 per hundredweight next year. The Class III price is forecast to average $10.60 to $11.00 per hundredweight this year and to rise to $14.30 to $15.30 per hundredweight next year. The all-milk price is projected at $11.95 to $12.35 per hundredweight in 2009 and to climb to $15.10 to $16.10 per hundredweight in 2010.

May milk production (NASS)
Milk production in the 23 major states during May totaled 15.5 billion pounds, up 32 million pounds (0.2 percent) from May 2008. Production per cow averaged 1,828 pounds for May, 9 pounds (0.5 percent) above May 2008. The number of cows on farms was 8.47 million head, 25,000 head less (down 0.3 percent) than May 2008, and 10,000 head less than April 2009.

May Federal Milk Order price and pool summary (AMS)
During May, about 11.3 billion pounds of milk were received from producers (26.1 percent higher than 2008). About 3.7 billion pounds of producer milk were used in Class I products, 3.7 percent lower than the previous year.  PD