Tuesday Closing Dairy Market Update - GDT Average Price Declined 4.9%

GENERAL OVERVIEW:

Class III and IV futures diverged, with Class III contracts higher while Class IV contracts declined. The Global Dairy Trade auction trade-weighted average declined by 4.9%.

MILK:

Class III milk futures received a little boost today. Traders responded to the increase in cheese prices. However, the gains were limited as traders are uncertain over the duration of the strength. More aggressive buying could be from the hotter weather predicted in many areas as well as the strong gains in grain prices over the past two days. There has always been a correlation between the corn price and the milk price. This correlation does not follow immediately and in all cases, but when traders are looking for something to move the market, this could be it. The Global Dairy Trade auction took place today, with the trade-weighted average declining 4.9% from the previous event. There were 26,316 metric tons sold at an average price of $3,793 per metric ton. This was an unusually large amount and about double what it has been the past few events. The anhydrous milk fat price decreased 3.9% to $6,341 per metric ton or $2.88 per pound. Butter declined 5.0% to $5,336 per metric ton or $2.42 per pound. Buttermilk powder gained 8.2% to $3,786 per metric ton or $1.72 per pound. Cheddar cheese fell 12.3% to $3,900 per metric ton or $1.77 per pound. Lactose declined 3.6% to $1,732 per metric ton or $0.79 per pound. Skim milk powder declined 7.0% to $3,135 per metric ton or $1.42 per pound. Whole milk powder declined 4.4% to $3,425 per metric ton or $1.55 per pound. Mozzarella cheese gained 3.8% to $3,897 per metric ton or $1.77 per pound.

AVERAGE CLASS III PRICES:

3 Month:	$16.29
6 Month:	$16.90
9 Month:	$17.05
12 Month:	$17.12

CHEESE:

The strength of spot cheese prices was a little surprising due to sufficient supplies available to the market. Buyers were aggressive in purchasing what was offered even at higher prices. To end-users, it might have made sense to purchase at the lower prices rather than risk waiting and end up paying more for cheese later. There is a time when reasonable prices need to be taken advantage of rather than guessing the strength of the market.

BUTTER:

There was no trading activity, leaving the price unchanged from Monday. The 25 uncovered offers remaining at the close suggest limited upside price potential in the near term.

OUTSIDE MARKETS SUMMARY:

December corn closed up 6.50 cents per bushel at $4.6425, November soybeans closed up 5.50 cents at $11.9775, and December soybean meal closed up $3.00 per ton at $316.50. September Chicago wheat closed up 4.50 cents at $6.1850. August live cattle closed down $0.68 at $238.43. August crude oil is up $3.37 per barrel at $71.92. The Dow Jones Industrial Average is down 131 points at 52,925, with the NASDAQ down 302 points at 25,819.

Tuesday Midday Dairy Market Summary - Cheese Prices Bounce

OUTSIDE MARKETS SUMMARY:

CORN:	3 Higher
SOYBEANS:	6 Higher
SOYBEAN MEAL:	$1.70 Higher
LIVE CATTLE:	$1.05 Lower
DOW JONES:	126 Points Lower
NASDAQ:	170 Points Lower
CRUDE OIL:	$2.09 Higher

MIDDAY MARKET UPDATE:

The block cheese price increased 6.25 cents to close at $1.51 with 11 loads traded and one unfilled bid remaining. The barrel cheese price increased 3.50 cents to close at $1.52 with no loads traded. No sellers showed up to the spot market. The dry whey price slipped 0.25 cent to close at 67.25 with no loads traded. Class III futures are steady to 36 cents higher, with the August contract showing the greatest gain. The butter price remained unchanged at $1.6500 with no loads traded. There was an unfilled bid and 25 uncovered offers remaining at the close of spot trading. Grade A nonfat dry milk decreased 2.50 cents to close at $1.4750 with 3 loads traded. This is the lowest price since February 2. Class IV futures are 40 cents lower to 6 cents higher. Butter futures are 0.55 cent lower to 0.75 cent higher. Dry whey futures are 0.25 -- 3.00 cents lower. Cheese futures are 0.40 cent lower to 3.90 cents higher. The only decline is in the May 2027 contract. Nonfat dry milk futures are 0.57 -- 4.00 cents lower.

Tuesday Morning Dairy Market Update - Limited Volatility Expected

OPENING CALLS:

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

OUTSIDE MARKET OPENING CALLS:

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

MILK:

There was not much to move milk futures on Monday. The gains in spot cheese and butter prices were offset by weakness in dry whey and nonfat dry milk prices. The fundamentals have remained similar to what they have been for a while, resulting in limited volatility. Limited volatility makes it more difficult for traders to scalp the market for a short-term profit. Seasonal buying should kick in, but with sufficient supplies being offered on the spot market, it may not provide much support. Milk output is expected to exceed that of a year ago throughout the rest of this year.

CHEESE:

The block cheese price has been increasing, but the gain has been slow and may be limited. There is little reason for buyers to be aggressive as sellers continue to offer supplies. Milk production has slowed, but there are sufficient volumes available.

BUTTER:

The price is expected to be supported, but may have difficulty developing an uptrend. Churns continue to operate on full schedules with extra cream available on the spot market. The price is expected to remain choppy, but with support.