Wednesday Closing Dairy Market Update - Price Support Remains Elusive

GENERAL OVERVIEW:

It was another day of negativity as futures declined in response to lower cash. The Global Dairy Trade Auction trade-weighted average declined 2.8 percent.

MILK:

Dairy futures are in a downdraft and have been unable to find support. Buyers in the spot markets have no reason to step up aggressively to purchase supplies. Manufacturers are moving supplies they produce with the intent of limiting the build-up of inventory. Strong milk output keeps sufficient milk supplies available for manufacturing. Increased milk production compared to a year ago leaves manufacturers and end-users confident that the supply will remain sufficient for demand. The increase in manufacturing capacity has exceeded the volume of milk available, but with the expectation that it will be filled. The Global Dairy Trade auction trade-weighted average declined 2.8 percent from the previous event. There were 12,922 metric tons sold at an average price of $3,979 per metric ton. Anhydrous milk fat declined 1.0 percent to $6,601 per metric ton or $2.99 per pound. Butter declined 2.4 percent to $5,516 per metric ton or $2.50 per pound. Cheddar cheese declined 3.4 percent to $4,471 per metric ton or $2.03 per pound. Lactose gained 4.2 percent to $1,702 per metric ton or $0.77 per pound. Mozzarella cheese declined 5.0 percent to $3,750 per metric ton or $1.70 per pound. Skim milk powder declined 3.6 percent to $3,368 per metric ton or $1.53 per pound. Whole milk powder declined 3.1 percent to $3,589 per metric ton or $1.63 per pound.

AVERAGE CLASS III PRICES:

3 Month:	$16.27
6 Month:	$16.95
9 Month:	$17.11
12 Month:	$17.16

CHEESE:

Spot milk prices made a substantial change for the previous week. Cheese plants are actively purchasing extra milk to keep plants running at capacity. Spot milk prices range from $2.00 below class to $0.50 over class. There are reports that export interest is improving due to the continued attractive U.S. prices.

BUTTER:

The possibility of the price declining to the low on May 21st is possible before the market finds support. The number of uncovered offers remaining at the close today suggests further price weakness. If buyers turn more aggressive, the upside price potential will be limited.

OUTSIDE MARKETS SUMMARY:

July corn closed up 7.25 cents per bushel at $4.2100, July soybeans closed up 2.00 cents at $11.3200, and July soybean meal closed steady at $304.80. July Chicago wheat closed up 16.75 cents at $6.1275. August live cattle closed down $0.35 at $248.85. July crude oil is down $0.43 per barrel at $75.62. The Dow Jones Industrial Average is down 507 points at 51,493, with the NASDAQ down 355 points at 26,022.

Wednesday Midday Dairy Market Update - Butter Falls Back Near the Low

OUTSIDE MARKETS SUMMARY:

CORN:	6 Higher
SOYBEANS:	3 Higher
SOYBEAN MEAL:	$0.30 Higher
LIVE CATTLE:	$0.20 Higher
DOW JONES:	129 Points Higher
NASDAQ:	51 Points Higher
CRUDE OIL:	$0.42 Higher

MIDDAY MARKET UPDATE:

The block cheese price declined 1.25 cents to close at $1.4575 with one load traded. The barrel cheese price remained unchanged at $1.42, with no loads traded. The dry whey price declined a penny to close at 67.75 cents with no loads traded. The weakness of blocks and dry whey moved Class III futures to double-digit losses in numerous contracts. Prices range from 2 to 17 cents lower. The butter price declined 4.50 cents to close at $1.5550 with 30 loads traded. This moves the price within 3.00 cents of the previous low set on May 21st. There were 5 unfilled bids and 37 uncovered offers remaining at the close. Grade A nonfat dry milk continued the losses with the price declining 3.50 cents to close at $1.6350 with 11 loads traded. Buyers remain active but only at lower prices. Class IV futures are 33 cents lower to 3 cents higher. June is the only contract posting a gain and the one with the most contracts traded. Butter futures are 0.25 -- 4.10 cents lower. Dry whey futures are 0.52 cent lower to 0.25 cent higher. Cheese futures are 0.10 -- 1.60 cents lower. Nonfat dry milk futures are 2.50 cents lower to 1.20 cents higher.

Wednesday Morning Dairy Market Update - Strong Interest in June Class IV Contract

OPENING CALLS:

Class III Milk Futures:	3 to 6 Lower
Class IV Milk Futures:	4 to 10 Lower
Butter Futures:	1 to 2 Lower

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	2 to 3 Higher
Soybean Futures:	6 to 8 Higher
Soybean Meal Futures:	$2 to $3 Higher
Wheat Futures:	7 to 9 Higher

MILK:

Milk futures have been under pressure with Class IV showing the greatest weakness. The decline in nonfat dry milk has resulted in futures falling back to the lowest level since Jan. 23. This does not bode well for milk prices for a time -- or even the rest of the year. There is no slowing of milk output so far this year and it is not expected to decline anytime soon. Price strength is short-lived as the underlying cash prices remain choppy. The June Class IV contract showed unusual trading activity overnight. There were 30 contracts traded and the price increased a penny. It is unusual because Class IV futures rarely trade overnight, and the volume taking place in June is surprising. The June contract is mostly priced and may move very little from now until the Federal Order prices are announced.

CHEESE:

Cheese prices are not expected to move much. Any price strength will be short-lived. Cheese supplies are sufficient for demand with strong production due to milk availability. Buyers have not been purchasing for later demand as they have little concern over supply.

BUTTER:

There is concern that butter price may move back to the low again before buying interest supports the market. Buyers may hold back to wait for sellers to reduce their prices. Nonfat dry milk is expected to show further weakness.