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.

Monday Closing Dairy Market Update - Milk Futures Show Limited Upside

GENERAL OVERVIEW:

Milk futures closed steady to higher, with some thought that buyers may turn a bit more aggressive as the second half of the year unfolds. That would be based on seasonality and not a noticeable change in fundamentals.

MILK:

The beginning of the second half of the year came without much fanfare. It is uncertain as to the extent hot weather will play in the milk supply, but it is never a good idea to plan marketing strategies based on a potential impact on milk production. Even if weather impacts milk production, increased cow numbers and better facilities are likely to keep milk output above a year ago. The key to cows holding milk production is the duration of hot weather. Cows generally bounce back quickly if it lasts a short period of hot weather. Class III futures maintain some premium in subsequent months. Class IV futures carry virtually no premium throughout the first half of next year. There is little expectation for the nonfat dry milk price to see upside potential.

AVERAGE CLASS III PRICES:

3 Month:	$16.16
6 Month:	$16.82
9 Month:	$16.99
12 Month:	$17.08

CHEESE:

Milk output has declined from its peak but remains higher than a year ago. This keeps sufficient milk available to the vat with plants running on full schedules. Cheese buyers should turn more aggressive as they look ahead and prepare for later demand. However, buyers are not concerned over the cheese supply at the current time. Buyers are not interested in aggressively building inventory.

BUTTER:

The butter price may find support and hold at the current level or higher now that increased temperatures are impacting butterfat levels. International demand remains strong.

OUTSIDE MARKETS SUMMARY:

December corn closed up 16.25 cents per bushel at $4.5775, November soybeans closed up 44.50 cents at $11.9225, and December soybean meal closed up $9.10 per ton at $313.50. September Chicago wheat closed up 14.25 cents at $6.1400. August live cattle closed down $0.13 at $239.10. August crude oil is down $0.07 per barrel at $68.62. The Dow Jones Industrial Average is up 156 points at 53,056, with the NASDAQ up 288 points at 26,1221.

Monday Midday Dairy Market Summary - Spot Prices Trade Mixed

OUTSIDE MARKETS SUMMARY:

CORN:	16 Higher
SOYBEANS:	55 Higher
SOYBEAN MEAL:	$9.10 Higher
LIVE CATTLE:	$0.17 Higher
DOW JONES:	2 Points Higher
NASDAQ:	258 Points Lower
CRUDE OIL:	$0.25 Lower

MIDDAY MARKET UPDATE:

The block cheese price increased 1.50 cents to close at $1.4475 with one load traded. The barrel cheese price increased 1.00 cent to close at $1.4850 with no loads traded. The dry whey price decreased 1.00 cent to close at 67.50 cents with no loads traded. The weakness of dry whey offset the strength of blocks, leaving Class III futures 1 cent lower to 6 cents higher. The butter price increased 1.25 cents to close at $1.6500 with 4 loads traded. Grade A nonfat dry milk slipped 0.50 cent to close at $1.50 with 12 loads traded. Class IV futures have only traded in the August contract at 20 cents higher. Butter futures are 0.47 cent lower to 1.02 cents higher. Dry whey futures are 0.05 -- 0.20 cent lower. Cheese futures are 0.20 cent lower to 1.30 cents higher. Nonfat dry milk futures are steady to 4.00 cents higher.