Thursday Midday Dairy Market Summary - Spot Butter Finds Buying Interest at the Low

OUTSIDE MARKETS SUMMARY:

CORN:	7 Higher
SOYBEANS:	8 Higher
SOYBEAN MEAL:	$11.20 Higher
LIVE CATTLE:	$1.95 Lower
DOW JONES:	423 Points Lower
NASDAQ:	209 Points Lower
CRUDE OIL:	$0.86 Higher

MIDDAY MARKET UPDATE:

The block cheese price increased 2.75 cents, closing at $1.6475 with two loads traded. The barrel cheese price remained unchanged at $1.57 with no loads traded. The dry whey price increased a penny to close at 64.50 cents with no loads traded. Class III futures are 4-32 cents lower. The butter price closed 0.75 cent lower at $1.7925 with 26 loads traded. The price initially declined to $1.74 before buying interest regained the losses. Grade A nonfat dry milk increased 2.50 cents to close at $1.8450 with five loads traded. Class IV futures are 6-15 cents higher. Butter futures are 0.80-4.90 cents lower. Dry whey futures are 0.02-1.47 cents lower. Cheese futures are 1.90 cents lower to 0.20 cent higher.

Thursday Morning Dairy Market Update - Substantial Weakness Expected

OPENING CALLS:

Class III Milk Futures:	10 to 20 Lower
Class IV Milk Futures:	5 to 10 Lower
Butter Futures:	2 to 3 Lower

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	4 to 6 Higher
Soybean Futures:	5 to 9 Higher
Soybean Meal Futures:	$3 to $5 Higher
Wheat Futures:	8 to 10 Higher

MILK:

It appears the weakness evident at the close of trading on Wednesday may dominate early trading Thursday morning. Bids and offers for Class III futures are significantly below Wednesday's close. The only contracts traded overnight were the March and April. March traded 3 cents lower with April down 44 cents. Traders are concerned block cheese price may retreat after moving back to the high of March 9. There is no other unexpected specific fundamental reason. Milk production is increasing seasonally as the spring flush begins. USDA will release the February Milk Production report on Friday.

CHEESE:

Traders are concerned block cheese price may have reached a threshold and decided to liquidate late on Wednesday. This may carry over to Thursday until further direction is seen from spot trading. The upside price potential may be limited

BUTTER:

Butter futures have taken a beating due to weakness in spot price. Butter has declined to the lowest level since Feb. 19. The question is whether the price is low enough to generate buying interest. It had been unexpected that the price would decline to this level. Trading activity in the spot market has been strong as sellers continue to move supplies at lower prices.

Wednesday Closing Dairy Market Update - Milk Futures Weakened as the Day Progressed

GENERAL OVERVIEW:

Spot cheese prices increased, but the weakness of dry whey offset the strength of blocks. Class III futures closed lower as the increase in barrels has no impact on the market in the pricing calculation. Class IV was under pressure due to the lower butter price.

MILK:

After the CME settled for the day, Class III futures showed further pressure as trading continued until the close. This further pressure that was seen after the market settled for the day might be reflected in the overnight market. Futures have been showing some strength in the past few days, but that may come to an end. If cheese prices decline and further weakness is seen in dry whey, futures will retrace. USDA will release the February Milk Production report on Friday, which is expected to show strong milk output and increased cow numbers. That has been the pattern for more than a year and is not expected to change anytime soon. The percentage of gain may not be as much due to the month being compared to a strong month last year. However, the USDA estimates the average milk output this year to be substantially higher than a year ago.

AVERAGE CLASS III PRICES:

3 Month:	$16.70
6 Month:	$17.42
9 Month:	$17.80
12 Month:	$17.73

CHEESE:

The block cheese price recovered from the weakness of last week. This may raise concerns as to whether there will be more upside price potential. That may be the reason Class III futures saw further weakness as the day progressed.

BUTTER:

It is uncertain as to where the butter price will be supported. The decline of this level was unexpected, as retail demand has improved. Butter production has been strong, but inventory remained substantially below a year ago. Inventory is expected to show an increase for February on the Cold Storage report next week. However, the increase is expected to be less than usual and should keep inventory below that of a year ago.

OUTSIDE MARKETS SUMMARY:

May corn closed up 9.25 cents per bushel at $4.6325, May soybeans closed up 4.75 cents at $11.6175, and May soybean meal closed up $10.00 per ton at $321.70. May Chicago wheat closed up 14.50 cents at $6.0425. April live cattle closed up $0.18 at $235.40. April crude oil is up $3.73 per barrel at $99.94. The Dow Jones Industrial Average is down 768 points at 46,225, with the NASDAQ down 327 points at 22,152.