Class III, Cheese and Whey
Although blocks and barrels moved higher yesterday, futures reaction was tepid. Class III settled anywhere from -3 to +15 in 2014 yesterday, while weakness permeated the 2015 contracts.   The 2015 contracts settled mostly lower with the exception of November to settle anywhere from -13 to UNCH on the day.    Barrels continue to trade over blocks, with the barrels trading 3 ¾ cents over blocks.   As we sit above the 2$ mark in blocks once again, we are still off 2014 highs by 41 cents.   Blocks has been range bound, trading within a 12 cent range since early May.   The Jan through Dec Class III pack is currently trading at 18.05 while the remainder of 2014 is now trading near $20.32.
While spot continues to move higher, the market continues to shrug off these gains as weakness continues internationally.   International prices released today reflect a weakness across the board for SMP, WMP and Butter.   Lack of any significant heat events as we near August also seems to be factoring into the lackluster reaction in Class III despite its recent move higher.   Western heat of earlier this week is subsiding.  The 5-10 day forecast for Tulare, CA is calling for highs in upper 90s with lows in the mid-60s at night.  The same forecast for Sunnyside, WA is calling for high’s in the low 90s and lows in the 60s.
 
For the week ending July 5, dairy cow slaughter under federal inspection was down 11.9%, at 41,600 head, compared with the same period the previous year. Year-to-date slaughter levels are 10.7% lower than 2013 levels, with 1,448,700 head slaughtered.

The Cold Storage and Livestock Slaughter reports, as well as the Commercial Disappearance tables are scheduled for release next week. The August Class I base milk price will also be announced.
Class IV, NFDM, and Butter
Butter futures settled anywhere from -1.000 to +1.275 on the day through 2015.   As with Class III, butter failed to move sharply even as spot moved up 6 cents to $2.4500.  2015 contracts were fairly active with trades occurring through December of 2015.  Interest in the 2015 contracts has picked up as buyers look to get on coverage early, in light of the current situation, $1.70 is now quite attractive as we sit near $2.5000 in the spot month.  Demand internationally is light, however, this comes as no surprise due to our high domestic prices.  Demand for Class II products has hampered production as stocks remain tight.
 
NFDM traded mostly higher through 2014 with no activity in 2015.  2014 contracts settled anywhere from + 2.000 to +0.225yesterday even as spot fell some 2 cents.  There is little fresh fundamental news.  International prices continue to weaken and with lack of any significant heat events we can expect the short term bias in NFDM to be sideways to weaker.
 
We look for a steady open across the board for class IV/NFDM and mixed open for butter.

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