Wednesday Morning Dairy Market Update - Markets Search For Direction

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	1 to 2 Higher

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	3 to 5 Lower
Soybean Futures:	Mixed
Soybean Meal Futures:	$2 to $3 Higher
Wheat Futures:	15 to 17 Lower

MILK:

Milk futures have taken a beating so far this week, with the May Class III contract falling $0.83 and the June contract falling $0.71. Class IV futures continued their decline, but with less loss than Class III contracts. The continued weaknes of Class IV was understandable due to the weakness of butter. However, the strength of nonfat dry milk on Tuesday should have garnered buying interest from traders, but it failed to do so. The weakness of Class III futures was a head-scratcher as the underlying cash prices held mostly steady. The weakness seemed to be fueled by a negative perception. The decline in the trade-weighted average in the Global Dairy Trade auction on Tuesday is the first after six consecutive events posting gains and is a cause for concern.

CHEESE:

Cheese prices might have limited upside potential due to increased cheese production as the spring flush unfolds. It will be up to demand to keep up with production and limit the increase in inventory.

BUTTER:

Butter has not been able to find solid support. Price increases in the spot market have been short-lived. Manufacturers are moving supplies without hesitation to keep inventory from building at the plant level. There is no concern about the availability of supply in the near term.

Tuesday Closing Dairy Market Update - Global Dairy Trade Auction Declined 3.4%

GENERAL OVERVIEW:

Milk futures took a beating again today, with Class III futures posting substantial losses. Spot prices did not show much movement, with traders focusing on the slight weakness of butter and barrels. The Global Dairy Trade auction trade-weighted average decreased 3.4%.

MILK:

Milk futures took a beating as traders were more concerned over the slight weakness of the butter and barrel cheese prices rather than the stability of block cheese and dry whey, and the increase in nonfat dry milk. The market may be overdone to the downside, and futures could bounce later this week. The Global Dairy Trade auction took place today, with the trade-weighted average declining 3.4%. This was the first decline after six consecutive events of gains. There were 16,497 metric tons sold at an average price of $4,228 per metric ton. Anhydrous milk fat declined 7.1% to $7,027 per metric ton or $3.19 per pound. Butter declined 8.1% to $6,181 per metric ton or $2.80 per pound. Buttermilk powder gained 0.7% to $3,182 per metric ton or $1.44 per pound. Cheddar cheese declined 3.1% to $4,766 per metric ton or $2.16 per pound. Lactose declined 0.6% to $1.454 per metric ton or $0.66 per pound. Skim milk powder declined 1.6% to $3,381 per metric ton or $1.53 per pound. Whole milk powder declined 0.7% to $3,687 per metric ton or $1.67 per pound. Mozzarella cheese declined 6.2% to $3,945 per metric ton or $1.79 per pound.

AVERAGE CLASS III PRICES:

3 Month:	$17.55
6 Month:	$18.11
9 Month:	$18.25
12 Month:	$18.11

CHEESE:

There is no shortage of cheese as output improves seasonally. Traders seem to think that the upside potential from here is limited. This has resulted in the liquidation of positions just in case further weakness unfolds in the next few days. It is unlikely cheese prices will fall apart, but there is no way of knowing for sure. The butter price was not expected to decline as much as it had, but it certainly did. The cheese market is not immune to further weakness.

BUTTER:

Sellers continue to offer butter on the spot market as they move supplies rather than let them increase and speculate on a price increase that may not develop. It is a buyer's market as they just need to wait for butter to be offered rather than having to bid the price higher to increase ownership.

OUTSIDE MARKETS SUMMARY:

May corn closed down 5.00 cents per bushel at $4.4900, May soybeans closed down 8.50 cents at $11.5825 and May soybean meal closed down $4.80 per ton at $311.80. May Chicago wheat closed up 2.75 cents at $5.9800. June live cattle closed down $1.23 at $245.80. May crude oil is up $0.54 per barrel at $112.95. The Dow Jones Industrial Average is down 85 points at 46,584, with the NASDAQ up 22 points at 22,018.

Tuesday Midday Dairy Market Summary - Traders Focus on Weakness

OUTSIDE MARKETS SUMMARY:

CORN:	5 Lower
SOYBEANS:	9 Lower
SOYBEAN MEAL:	$4.60 Lower
LIVE CATTLE:	$0.60 Higher
DOW JONES:	126 Points Lower
NASDAQ:	91 Points Lower
CRUDE OIL:	$2.03 Higher

MIDDAY MARKET UPDATE:

The block cheese price remained unchanged at $1.6735 with four loads traded. The barrel cheese price slipped 0.25 cent to close at $1.5900 with one load traded. The dry whey price remained unchanged at 69.00 cents with no loads traded. Traders focused on the slight weakness in barrels. This triggered selling in Class III futures with contracts 3 to 52 cents lower. The butter price slipped 0.50 cent to close at $1.7475 with 20 loads traded. This is the lowest butter price since Feb. 18. Grade A nonfat dry milk increased 2.25 cents to close at $1.9850 with no loads traded. Traders focused on the slight weaknes of butter rather than the strength of nonfat dry milk. Class IV futures are 5 to 26 cents lower. Butter futures are steady to 2.20 cents lower. Dry whey futures are steady to 0.75 cent lower. Cheese futures are 0.60 to 4.50 cents lower.