Friday Morning Dairy Market Update - Further Weakness Expected in Spot Prices

OPENING CALLS:

Class III Milk Futures:	4 to 8 Lower
Class IV Milk Futures:	2 to 5 Lower
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	Mixed
Soybean Futures:	1 to 2 Higher
Soybean Meal Futures:	Mixed
Wheat Futures:	1 to 2 Higher

MILK:

Thursday's weakness of the underlying cash did not put as much pressure on milk futures as would have been expected. However, overnight trade indicates further weakness today. There has been no fundamental change in the market. This may keep spot prices in a range and Class III milk futures under pressure. Class IV futures have benefited from continued strength in nonfat dry milk. Cow numbers continue to increase with farm expansions taking place. This is likely to continue under the current market fundamentals.

CHEESE:

Cheese prices have been unable to break out of the trading range despite good domestic and international demand. The current supply is sufficient, leaving buyers unaggressive. There is no concern over a tight supply. Prices are expected to move sideways at least through the spring flush.

BUTTER:

There is caution now that the spot butter price slipped on Thursday; it could go back down to the lows or below. That has been the previous pattern. The price is certainly low enough to generate buyer interest, but so far, they have not had to be aggressive.

Thursday Closing Dairy Market Update - The Global Dairy Trade Price Gains 1.5%

GENERAL OVERVIEW:

Class III futures were lower in response to the decline in cheese prices, but losses were kept to a minimum. The spot market proved again today that the upside price potential is likely limited for the time being and maybe for much of the rest of the year. The Global Dairy Trade auction increased 1.5 percent.

MILK:

There was hope that the pattern of an increase of a day or two would change, but that was not the case. Spot prices came under pressure as buyers stepped back again. This continues to add to the overall weakness of the Class III market. As long as strong milk production remains, it will be difficult for the market to see much upside. The Global Dairy Trade auction took place earlier this week, with the trade-weighted average increasing 1.5 percent from the previous event. There were 13,743 metric tons sold at an average price of $4,127 per metric ton. Anhydrous milk fat increased 1.1 percent to $6,461 per metric ton or $2.93 per pound. Butter declined 2.6 percent to $5,525 per metric ton or $2.51 per pound. Buttermilk gained 9.0 percent to $3,467 per metric ton or $1.57 per pound. Cheddar cheese declined 3.6 percent to $4,611 per metric ton or $2.09 per pound. Lactose gained 3.7 percent to $1.522 per metric ton or $0.69 per pound. Skim milk powder gained 3.0 percent to $3,547 per metric ton or $1.61 per pound. Whole milk powder gained 2.2 percent at $3,741 per metric ton or $1.70 per metric ton. Mozzarella gained 4.7 percent to $4,010 per metric ton or $1.82 per pound.

AVERAGE CLASS III PRICES:

3 Month:	$17.69
6 Month:	$18.17
9 Month:	$18.18
12 Month:	$18.03

CHEESE:

Reports from the Western region indicate that the peak of spring flush is more sustained this year than usual. This continues to provide plentiful milk supplies for cheese production. The Dairy Products report released on Wednesday showed American cheese output a year earlier, but that has had no impact on supporting cheese prices.

BUTTER:

The sufficient supply of milk and cream available is a broken record, as it has not changed much over quite some time. Butter production continues to run seven days a week as churns utilize the available cream supplies. International demand remains strong as the U.S. price is nearly $0.90 per pound below the world price.

OUTSIDE MARKETS SUMMARY:

July corn closed down 1.00 cent per bushel at $4.6750, July soybeans closed down 2.50 cents at $11.9225 and July soybean meal closed up $1.60 per ton at $318.90. July Chicago wheat closed down 5.00 cents at $6.1225. June live cattle closed down $3.43 at $250.05. June crude oil is up $0.54 per barrel at $95.62. The Dow Jones Industrial Average is down 314 points at 48,597, with the NASDAQ down 33 points at 25,806.

Fluid Milk and Cream - Western U.S. Report 19

Milk production is steady in California. Handlers indicate spring milk production is maintaining good output volumes. Spot milk loads are available. Stakeholders indicate intakes at balancing plants are manageable. 

Farm level milk output is steady in Arizona and New Mexico. However, Arizona manufacturers are bringing in spot milk loads. 

Milk production in the Pacific Northwest is mixed this week. Manufacturers indicate plant managers are receiving contracted milk volumes, but spot milk loads are somewhat tight. Stakeholders convey increases in the weight limit for milk tankers are being considered in Oregon. 

Farm level milk output in the Mountain States of Idaho, Utah, and Colorado is stable. Colorado handlers note there has been more longevity to peak spring output volumes in the state this year. Milk volumes are meeting manufacturer needs in the Mountain States. Class I demands are steady, Class II and III demands vary from steady to stronger, and Class IV demands vary from steady to lighter throughout the region. 

Cream loads are available for spot buyers. Demand varies from lighter to steady. Cream multiples decreased this week. No changes in condensed skim milk availability or demand are reported.