Dairy prices are bullish at a time of year when the seasonal spring milk “flush” is usually tempering prices. May milk output was down 0.4% from a year ago – and tighter milk supplies are having an adverse effect on dairy products production. Butter output in May was 4.2% below a year ago. YTD butter production is running 2.5% behind 2018 levels and setting the stage for even higher prices. The CME butter market, currently at $2.4050/lb, averaged $2.30 for the 1st half of 2019 and will average $2.45 or better in the 2nd half. Total cheese production managed a 1.6% gain in May, but YTD 2019 output is up just 0.3%. Cheese supplies in cold storage dropped 13M pounds or -0.9% in May (from April), indicating continued strong demand. CME block cheese ($1.8475/lb) averaged $1.62 in the first half and will average close to $1.80 for the 2nd half of 2019.