Tuesday Morning Dairy Market Update - Limited Activity Expected Ahead of Spot Trading

OPENING CALLS:

Class III Milk Futures:	4 to 8 Higher
Class IV Milk Futures:	4 to 6 Higher
Butter Futures:	Steady to 1 Higher

OUTSIDE MARKET OPENING CALLS:

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

MILK:

The market is expected to remain choppy. The fundamentals continue to follow the path they have been on for some time. Traders find little to get excited over and continue to try to scalp the market for a short-term profit if they guess correctly. However, with limited volatility, trading volume has been lighter as some traders see limited opportunity. If market fundamentals remain as they are, there will be limited upside potential with futures rolling down as the premium erodes. The June contract is nearly priced and will not move much through the rest of the month. July contracts will move closer to the June over the next few weeks if fundamentals do not change.

CHEESE:

Cheese supplies are sufficient for demand. Schools being closed has moved more milk to the vat. Cheese demand has kept pace with increased production, keeping inventory slightly below a year ago. Historically, inventory should decline during the second half of the year, but strong milk output may limit the decline in inventory.

BUTTER:

The butter price seems to be supported but may have limited upside potential as long as sellers remain aggressive. There were a significant number of uncovered offers at the close of spot trading on Monday. That does not necessarily mean those sellers will be aggressive Tuesday, but it may indicate the upside potential may be limited.

Monday Closing Dairy Market Update - Milk Futures Close Higher

GENERAL OVERVIEW:

Milk futures were higher as traders responded to the increasing butter and cheese prices. Class IV traders focused on the increase in the butter price rather than the weakness of the nonfat dry milk price.

MILK:

The market fundamentals remain much the same as they have over the past weeks and even months. Milk production remains higher than a year ago, with cow numbers increasing. Milk in some areas has surpassed the peak of the spring flush but remains strong. Some areas continue to experience spring flush levels. Cow numbers continue to increase as expansions take place. Substantial income is being realized from beef on dairy calves. It seems that farmers are doing a better job managing cows, as the increase in cow numbers does not suggest a significant number of animals are just being kept around to produce a calf, as some indicate. If that were the case, milk production per cow would not average as much as it did a year ago. It does not appear there will be a huge increase in slaughter anytime soon. Beef prices are not expected to decline anytime soon, which will keep calf prices high. Milk futures were higher today, creating the opportunity for traders to possibly initiate positions for short-term trade.

AVERAGE CLASS III PRICES:

3 Month:	$16.86
6 Month:	$17.59
9 Month:	$17.66
12 Month:	$17.63

CHEESE:

The barrel cheese price moved after eight consecutive days of remaining unchanged. Any movement in the barrel price has no direct influence on milk prices, as it is not a part of the pricing equation. Traders focus on blocks and dry whey for Class III and butter and nonfat dry milk for Class IV.

BUTTER:

The price increase in butter was impressive, given the volume of loads traded. Buyers are willing to support the market but are not willing to be overly aggressive. Retail demand is improving, which is increasing orders for immediate needs. Some buying is surfacing to build inventory for later demand.

OUTSIDE MARKETS SUMMARY:

July corn closed up 1.25 cents per bushel at $4.1875, July soybeans closed down 5.75 cents at $11.1575, and July soybean meal closed down $5.80 per ton at $302.70. July Chicago wheat closed up 3.25 cents at $5.8325. August live cattle closed down $4.93 at $236.73. July crude oil is up $0.74 per barrel at $91.28. The Dow Jones Industrial Average is down 81 points at 50,786, with the NASDAQ up 220 points at 25,930.

Monday Midday Dairy Market Summary - Spot Butter Had a Huge Volume of Loads Traded

OUTSIDE MARKETS SUMMARY:

CORN:	2 Higher
SOYBEANS:	6 Lower
SOYBEAN MEAL:	$4.80 Lower
LIVE CATTLE:	$3.47 Lower
DOW JONES:	40 Points Lower
NASDAQ:	350 Points Higher
CRUDE OIL:	$0.34 Higher

MIDDAY MARKET UPDATE:

The block cheese price increased 1.25 cents to close at $1.4850 with 13 loads traded. The barrel cheese price increased 4.00 cents to close at $1.48 with one load traded. The dry whey price remained unchanged at 67.00 cents with no loads traded. Class III futures are 1 cent lower to 17 cents higher. The butter price increased 0.75 cent to close at $1.70 with 51 loads traded. It certainly was positive to see the price increase despite the volume of loads traded. However, there were 2 unfilled bids and 34 uncovered offers remaining at the close, suggesting limited upside price potential. Grade A nonfat dry milk decreased 4.50 cents to close at 2.00 with 8 loads traded. This is the lowest price since April 7. Class IV futures are 2-33 cents higher. Butter futures are 0.97 cent lower to 1.87 cents higher. Dry whey futures are 0.50 cent lower to 0.50 cent higher. Cheese futures are 0.50 cent lower to 1.20 cents higher.