Thursday Morning Dairy Market Update - Will Wednesday's Price Volatility Continue

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	1 to 10 Higher
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 2 Lower
Soybean Futures:	7 to 10 Lower
Soybean Meal Futures:	$1.50 to $2.00 Lower
Wheat Futures:	1 to 2 Lower

MILK:

Volatility is the best way to describe the Class III market as well as dry whey and nonfat dry milk Wednesday. Class III struggled to find direction as it traded mixed most of the day, with some midday and end of the trading session ticks higher from cheese strength. Class IV has had limited trading this week but bids and offers on the futures contracts showed flat trade is possible. Dry whey is still reaping the benefits of a protein market boom, but has found its limit where world market alternatives can be found cheaper. Overnight markets have Class III trading 13 cents lower to 11 cents higher.

CHEESE:

The cheese story has been centered around cash trade lately. Amid every other market falling apart, cheddar cheese barrel and blocks inched another 0.5 cent higher on Wednesday. Futures struggled with outside pressure from the dairy complex to hold onto much for gains, but the demand is there as the holidays quickly approach.

BUTTER:

Butter markets were mixed throughout Wednesday with the cash prices weaker. Seasonal baking will keep the nearby trade looking for opportunities to purchase butter when prices are best. A bit of a concerning fact on Wednesday was the extremely large amount of spot loads offered on the cash market. There were a normal number of bids available, but the offers greatly outweighed the bids into the close. This could be an indication of manufacturers trying to offset large quantities of product. However, with the Cold Storage report showing slightly less inventory from last month and production down from the previous month, it could just be timing of available product and the possible opportunity to sell with seasonal baking demand.

Wednesday Closing Dairy Market Update - Markets Decline

GENERAL OVERVIEW:

Initially morning futures trade was higher across the board but falling spot market prices eventually put pressure on the market and futures slid lower into the afternoon.

MILK:

Class III futures had some early strength in the day by support from higher cheese prices. Eventually cheese became weaker and brought Class III down with it but late day trade gained 13 cents on the November contract. At last call Dry Whey traded mixed today, in spite of the spot market falling 3.25 cents, yet there was limited trading activity after the spot market settled. Nonfat Dry Milk attempted to buck the trend with higher settlements on some futures months but late-day trade did lose ground with the rest of the market. The spot market was 2 cents lower for NDM. Class IV futures did not trade today however, bids and offers indicated that prices were flat.

AVERAGE CLASS III PRICES:

3 Month:	$16.78
6 Month:	$16.75
9 Month:	$16.87
12 Month:	$17.08

CHEESE:

The spot market confirmed the nearby strength of cheese demand as both cheddar blocks and barrels increased 0.5 cent in the face of the rest of the products trading lower for the day. Futures showed some strength in the face of the bearish tone from other dairy markets but eventually joined the crowd in weaker prices by the afternoon with a late pull higher in the nearby months.

BUTTER:

Butter futures were lower today, trading 0.75 to 1.625 cents lower on the day. Market is responding to the spot market trade which was off by 2.5 cents. 16 loads traded and while there were still 7 bids remaining, the sellers really came to the market today. At the close there were 147 loads being offered yet. This huge amount of butter being offered on the spot market trade sets a bearish tone that sellers have plenty of product to move and implies that buyers can be patient at these prices.

OUTSIDE MARKETS SUMMARY:

December corn closed up 3.00 cents per bushel at $4.5175, January soybeans closed down 5.00 cents at $12.3800 and December soybean meal closed up $1.10 per ton at $335.70. December Chicago wheat closed down 11.25 cents at $5.9900.

December live cattle closed down $3.53 at $227.33. December crude oil is up 2.89 per barrel at $102.79. The Dow Jones Industrial Average is up 84 points at 52,462 and the NASDAQ is up 7 points at 26,485.

Wednesday Midday Dairy Market Summary - Mixed Cash Markets

OUTSIDE MARKETS SUMMARY:

CORN:	2 Higher
SOYBEANS:	1 Higher
SOYBEAN MEAL:	$41.70 Higher
LIVE CATTLE:	$2.10 Lower
DOW JONES:	138 Points Lower
NASDAQ:	1 Point Higher
CRUDE OIL:	$3.08 Higher

MIDDAY MARKET UPDATE:

The block cheese price increased by 0.5 cents to close at $1.7450 with 3 loads traded. The barrel cheese price was 0.5 cents higher at $1.7250 with no loads traded. Dry Whey decreased by 3.25 cents closing at 84.25 cents with no loads traded. Class III futures are 3 cents to 28 cents higher. The butter price decreased by 2.5 cents, closing at $1.2850 with 16 loads traded. There were 7 bids and 147 offers remaining at the close. Grade A nonfat dry milk decreased 2 cents to close at $2.0400 with 5 loads traded. Class IV futures have not yet been traded today. Butter futures are 0.4 to 1.9 cents lower. Dry whey futures are 0.85 cents lower to 0.7250 cents higher. Cheese futures are 0.1 to 1.6 cents higher. Nonfat dry milk futures are 0.3 to 1.85 cents lower.