Tuesday Closing Dairy Market Update - The REAL Butter Act Has Been Introduced

GENERAL OVERVIEW:

Mixed trading activity dominated milk futures. Trading activity was exceptionally strong in the July and August Class III futures contracts. The REAL Butter Act has been introduced to the U.S. House of Representatives.

MILK:

Traders focused on the July and August Class III contracts today, with over 1,000 traded in July and over 800 in August. It has been some time since trading volume was this large in contracts. The movement of spot prices did not provide much to generate the level of trading interest in Class III contracts. The May Milk Production report had little impact on the market as increased production and higher cow numbers were anticipated. In the top 24 states, there were only 5 states that showed a decrease in milk production. Pennsylvania declined 1.9%; Vermont declined 0.9%; both Virginia and Washington declined 0.8%; and New Mexico declined 0.4%. Kansas showed the largest increase with a gain of 21.2% and was followed by Oregon with a gain of 7.1%. All other states gained less than 5.0%. The REAL Butter Act has been introduced to the U.S. House of Representatives. The Act is designed to force synthetic dairy products to disclose their laboratory origins. Tony Wied, a Republican representing Wisconsin's 8th Congressional District, has initiated the bill. This targeted federal bill aims to establish strict, mandatory labeling requirements for synthetic, laboratory-grown butter products, which are a direct attack on American dairy farmers.

AVERAGE CLASS III PRICES:

3 Month:	$16.13
6 Month:	$16.76
9 Month:	$16.95
12 Month:	$17.01

CHEESE:

The bounce in the cheese price is not expected to last or at least is not expected to see much upside potential. There is little indication of a tight market, which leaves buyers limited in their need to purchase cheese for upcoming demand. Any upcoming demand is expected to be met with sufficient cheese supplies due to strong cheese production.

BUTTER:

The butter price has fallen back further than expected and may continue with further weakness. Sellers want to move supplies at whatever price they can get. Buyers continue to hold back, remaining complacent.

OUTSIDE MARKETS SUMMARY:

July corn closed down 1.75 cents per bushel at $4.0975, November soybeans closed up .25 cent at $11.4175, and July soybean meal closed up $3.10 per ton at $302.90. September Chicago wheat closed down 10.50 cents at $5.9700. August live cattle closed down $1.35 at $246.00. August crude oil is down $0.65 per barrel at $73.21. The Dow Jones Industrial Average is down 46 points at 51,667, with the NASDAQ down 580 points at 25,587.

Tuesday Midday Dairy Market Summary - Butter and Nonfat Dry Milk Remained Under Pressure

OUTSIDE MARKETS SUMMARY:

CORN:	1 Lower
SOYBEANS:	2 Higher
SOYBEAN MEAL:	$2.20 Higher
LIVE CATTLE:	$0.96 Lower
DOW JONES:	136 Points Higher
NASDAQ:	345 Points Lower
CRUDE OIL:	$0.75 Lower

MIDDAY MARKET UPDATE:

The block cheese price increased 2.50 cents to close at $1.4150 with 5 loads traded. The barrel cheese price remained unchanged at $1.4600 with no loads traded. The dry whey price increased 0.50 cent to close at 68.50 cents, with one load traded. Class III futures are mixed, ranging from 8 cents lower to 6 cents higher. The butter price decreased 5.50 cents to close at $1.4750 with 15 loads traded. This is the lowest price since Jan. 21. There were more unfilled bids than uncovered offers remaining at the close. Grade A nonfat dry milk decreased 1.50 cents to close at $1.6000 with two loads traded. Class IV futures are mixed, ranging from 12 cents lower to 6 cents higher. Butter futures are steady to 3.25 cents lower. Dry whey futures are 0.45 cent lower to 0.25 cent higher. Cheese futures are 0.80 cent lower to 0.80 cent higher. Nonfat dry milk futures are 2.10 cents lower to 1.50 cents higher.

Tuesday Morning Dairy Market Update - Buyers Find No Reason For Concern

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 2 Lower
Soybean Futures:	5 to 7 Higher
Soybean Meal Futures:	$2 to $3 Higher
Wheat Futures:	Mixed

MILK:

The bearishness of the May Milk Production report had already been factored in. There was little reason to put further pressure on milk futures after the report was released. The report showed that milk production remains strong and milk prices are not going to increase anytime soon. The trend continues for increased milk production and higher cow numbers. This may be the pattern for the rest of the year. Low milk prices have not yet increased culling, as farmers do not find it necessary to cull for cash flow. Beef prices continue to remain high, and so will calf prices.

CHEESE:

Rather than finding support at the low prices, buyers continue to hold back and purchase at lower prices. Sellers continue to offer supplies on the spot market rather than build inventory in an abundant market. Higher milk production means increased cheese output. Demand has been keeping pace, but not strong enough to tighten the supply.

BUTTER:

The market has eliminated the gains seen in late May and is now at risk of falling back to the lows last seen in January. Churning is active, and supplies are sufficient. Manufacturers continue to sell butter on the spot market to manage inventory.