Cut faster. Burning wood means the cut is too slow. Go 6 inches a minute in the ply and see what happens. Also a little larger endmill is a good idea. You could try 1/8". Use carbide endmills is you can. They stay sharper. If you cant go faster slow the spindle down a bunch.
If your machine cant can't the ply that fast take a 1/8" deep cut twice.