Tuesday Closing Dairy Market Update - Traders Search for Price Direction

GENERAL OVERVIEW:

Milk futures were mostly higher in normal trading activity. Class IV futures were supported by the strength in nonfat dry milk. Choppy cash trade is expected to continue.

MILK:

Milk futures were mostly higher, but volatility was limited. The choppiness of underlying cash does not support a trending market. The only category showing consistency is nonfat dry milk. It has increased in price over the past eight consecutive trading days. There is some thought that the price could be near a threshold, but that remains to be seen. The price has moved back to the highest level since June 12. Milk production has increased from its lows seen during the hot weather in most areas, but it is not fully back to the level it was before. However, the return to higher milk output has come at a good time as more milk is moving to bottling. Spot milk has tightened with prices ranging from class to $5.00 over class, but there is sufficient available for those who need it.

AVERAGE CLASS III PRICES:

3 Month:	$17.14
6 Month:	$17.30
9 Month:	$17.36
12 Month:	$17.45

CHEESE:

The block cheese price has had difficulty remaining above $1.60 for very long. Buyers see no need to be aggressive. This has been seen over a few days as they never showed up to do business during spot trading. They are generally more aggressive at this time of year as buying interest increases from packagers and recutters as they prepare for the upcoming holiday season in a few months.

BUTTER:

The butter price has been unable to find solid support. A good volume of loads continues to change hands on the daily spot market with a significant number of uncovered offers remaining each day. Until the selling interest dries up, the upside price potential will be limited.

OUTSIDE MARKETS SUMMARY:

December corn closed down 1.50 cents per bushel at $4.8800, November soybeans closed up 0.75 cent at $12.1675, and December soybean meal closed up $0.10 per ton at $318.80. December Chicago wheat closed down 8.00 cents at $6.8125. October live cattle closed up $0.15 at $218.93. September crude oil is up $0.70 per barrel at $85.20. The Dow Jones Industrial Average is down 116 points at 53,343, with the NASDAQ down 355 points at 26,290.

Tuesday Midday Dairy Market Summary - Butter and Cheese Decline, Nonfat Pushes Higher

OUTSIDE MARKETS SUMMARY:

CORN:	2 Lower
SOYBEANS:	Unchanged
SOYBEAN MEAL:	$0.30 Higher
LIVE CATTLE:	$0.35 Higher
DOW JONES:	91 Points Lower
NASDAQ:	320 Points Lower
CRUDE OIL:	$0.50 Higher

MIDDAY MARKET UPDATE:

The block cheese price declined 2.00 cents to close at $1.5775 with no loads traded. The barrel cheese price remained unchanged at $1.5650 with no loads traded. The dry whey price remained unchanged at 69.50 cents with no loads traded. Class III futures are 2 cents lower to 22 cents higher. The butter price declined 1.25 cents to close at $1.4600 with 29 loads traded. There were 8 unfilled bids and 31 uncovered offers remaining at the close of spot trading. Grade A nonfat dry milk gained 2.75 cents to close at $1.7800 with five loads traded. This is the highest price since June 12th. Class IV futures are 6 -- 27 cents higher as traders focus on the strength of nonfat dry milk rather than the weakness of butter. Butter futures 6.50 cents lower to 0.67 cent higher. Dry whey futures are steady to 1.00 cent higher. Cheese futures 0.90 cent lower to 1.50 cents higher. Nonfat dry milk futures are 1.00 cent lower to 2.47 cents higher.

Tuesday Morning Dairy Market Update - Traders Uncertain of Market Strength

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	4 to 8 Higher
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	2 to 3 Higher
Soybean Futures:	8 to 9 Higher
Soybean Meal Futures:	$3 to $4 Higher
Wheat Futures:	2 to 4 Higher

MILK:

Overnight markets showed little direction for Tuesday. The general idea is spot prices will remain choppy. The market fundamentals are rather benign, following the pattern of recent weeks. Milk production has rebounded from the hot weather, allowing for sufficient milk to be available for both bottling and manufacturing. More milk moving to bottling for school accounts will not tighten the supply unless demand increases across the board. Spot milk prices are higher, but there is no concern over a shortage. The July Milk Production report will be released Thursday and is expected to show higher milk output than a year ago.

CHEESE:

Cheese prices are expected to remain choppy. Buyers are able to purchase what they need to fill orders and prepare for upcoming demand. Cheese production remains steady. Spot milk prices are higher due to more milk moving to bottling.

BUTTER:

Butter has yet to find solid support. Cash activity remains significant, but buyers see little need to be aggressive. Offers to sell on the daily spot market are plentiful. Current butter production is more than ample to meet demand.