Monday Closing Dairy Market Update - Milk Futures End on a Sour Note

GENERAL OVERVIEW:

Both Class III and Class IV futures suffered significant losses. It was understandable that Class IV futures would be lower, but it was surprising to see Class III futures show a similar weakness. Steady spot cheese prices and a slightly higher dry whey price should have left futures nearly steady.

MILK:

Milk production continues to increase seasonally, with the spring flush generally just beginning. Growth is expected with production running ahead of a year ago. There is little reason to believe that milk production will slow anytime soon. The outlook for better milk prices and continued high calf prices will keep cow numbers higher and likely increasing. Even with the significant decline of Class III futures today, prices are back to where they were at the close of March. The June through December contracts are solidly above $18.00. Class IV futures have not been as fortunate, with contracts declining since March 24. The only contracts remaining above $20.00 are April and May.

AVERAGE CLASS III PRICES:

3 Month:	$17.83
6 Month:	$18.30
9 Month:	$18.41
12 Month:	$18.24

CHEESE:

Spot cheese prices remained unchanged, with no interest from sellers to move product. This was bullish from the view that sellers were not anxious to move supplies, but bearish from the view that buyers were not aggressively looking to purchase supplies for demand or to build inventory. Traders were uncertain whether there would be a much further upside potential.

BUTTER:

Increasing retail demand and strong international demand have not been sufficient to provide support for the market. Buyers continue to purchase what they need without chasing the market higher. The available cream for butter production has declined slightly due to the increase in production from other Class II products. However, butter output remains high with manufacturers moving it to the spot market without hesitation.

OUTSIDE MARKETS SUMMARY:

May corn closed up 1.75 cents per bushel at $4.5400, May soybeans closed up 3.25 cents at $11.6675, and May soybean meal closed up $1.40 per ton at $316.60. May Chicago wheat closed down 3.00 cents at $5.9525. June live cattle closed up $0.70 at $247.03. May crude oil is up $1.19 per barrel at $112.73. The Dow Jones Industrial Average is up 165 points at 46,670, with the NASDAQ up 117 points at 21,996.

Monday Midday Dairy Market Summary - Weakness in Butter Eliminates the Gains

OUTSIDE MARKETS SUMMARY:

CORN:	1 Higher
SOYBEANS:	4 Higher
SOYBEAN MEAL:	$2.40 Higher
LIVE CATTLE:	$2.25 Higher
DOW JONES:	189 Points Lower
NASDAQ:	25 Points Lower
CRUDE OIL:	$1.58 Higher

MIDDAY MARKET UPDATE:

Both the block and barrel cheese prices remained unchanged at $1.6725 and $1.5925, respectively. No loads were traded in either category. There was only one unfilled bid for a load of blocks with no uncovered offers in either category. The dry whey price increased 0.25 cent to close at 69.00 cents. Class III futures are 27 cents lower to 3 cents higher with only the December contract showing a gain. The butter price declined 3.75 cents, closing at $1.7525 with 20 loads changing hands. This moved the price back to the level it was last Wednesday. Grade A nonfat dry milk declined a penny to close at $1.9625 with no loads traded. Class IV futures are 11 cents lower in both the May and June contracts and are the only contracts that have been traded. Butter futures are 0.05-4.02 cents lower. Dry whey futures are 1.02 cents lower to 0.22 cent higher. Cheese futures are 2.22 cents lower to 0.10 higher.

Monday Morning Dairy Market Update - Overnight Trade Shows Mixed Signals

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	4 to 8 Higher
Butter Futures:	Steady to 1 Higher

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 2 Lower
Soybean Futures:	3 to 5 Higher
Soybean Meal Futures:	$2 to $3 Higher
Wheat Futures:	3 to 4 Lower

MILK:

Overnight Class III milk futures were stronger in nearby contracts and weaker in later contracts. Activity was good with over 200 contracts traded in May and over 100 contracts in June and July. There was no significant fundamental change over the extended weekend, with traders anticipating further support in underlying cash. Milk production should continue to increase seasonally as the spring flush continues.

CHEESE:

Cheese demand has been good, resulting in an increase in inventory at a lower pace than a year ago. This continues to provide support to cheese prices. However, that support may be limited as buyers in the spot market may reach a threshold. Cheese production is higher than a year ago as higher milk receipts are increasing cheese production schedules.

BUTTER:

The butter price is floundering as sellers continue to offer supplies to the spot market. Buyers have not had to be aggressive and have been able to purchase substantial volumes of butter for improved demand, as well as to put into inventory in some cases. However, inventory remains significantly lower than a year ago, but that is not impacting the price.