Friday Closing Dairy Market Update - Cash Butter 23 cents Higher on the Week

GENERAL OVERVIEW:

Friday was a disappointing day for butter in both the cash market and the futures market, however the week overall made big strides towards higher prices. Cheese also had a positive week, gaining 3-4 cents from last week's average.

MILK:

Class III Milk futures had a volatile week, peaking on Wednesday with a close of $17.64 but returning to Monday levels today, closing within 4 cents of Monday's close at $16.32. Class IV remained relatively flat all week with no new news to drive the market higher or lower. On Thursday, the USDA released the Dairy Products report, which showed higher output for nearly every dairy product outside of frozen yogurt, regular ice cream (hard) and Nonfat Dry Milk for human consumption. The demand for dairy products is there in value-added products such as cheese and butter, and the market has slowly started to pay attention. Milk production is an uphill battle as we enter spring with more availability on an already saturated market, but processed products and exports will help support already low prices.

AVERAGE CLASS III PRICES:

3 Month:	$16.88
6 Month:	$17.47
9 Month:	$17.79
12 Month:	$17.70

CHEESE:

For the week, blocks increased 3.10 cents with 10 loads traded. The weekly average price is $1.5770. Barrels increased 3.00 cents with one load traded. The weekly average price is $1.5620. Dry Whey decreased 0.80 cents with one load traded. The weekly average price is 63.20 cents.

BUTTER:

For the week, butter increased 23.05 cents with 92 loads traded. The weekly average price is $2.0625. Grade A nonfat dry milk decreased 1.35 cents with 59 loads traded. The weekly average price is $1.6640.

OUTSIDE MARKETS SUMMARY:

May corn closed up 7.00 cents per bushel at $4.6050, May soybeans closed up 21.50 cents at $12.0075 and May soybean meal closed up $7.90 per ton at $317.20. May Chicago wheat closed up 33.00 cents at $6.1675. April live cattle closed down $3.95 at $234.58. April crude oil is up 9.67 per barrel at $90.68. The Dow Jones Industrial Average is down 453 points at 47,501 and the NASDAQ is down 361 points at 22,387.

Friday Midday Dairy Market Summary - Milk Futures Move Opposite Spot Prices

OUTSIDE MARKETS SUMMARY:

CORN:	5 Higher
SOYBEANS:	18 Higher
SOYBEAN MEAL:	$7.60 Higher
LIVE CATTLE:	$3.42 Lower
DOW JONES:	434 Points Lower
NASDAQ:	175 Points Lower
CRUDE OIL:	$8.85 Higher

MIDDAY MARKET UPDATE:

The block cheese price increased 0.75 cent, closing at $1.6175 with one load traded. The barrel price remained unchanged at $1.57 with one load traded. The dry whey price increased 0.50 cent, closing at 64.00 cents with no loads traded. Class III futures are 44 cents lower to 11 cents higher, with the only gain in the December contract. The butter price decreased 3.00 cents, closing at $2.01 with 47 loads traded. There were 17 unfilled bids and one uncovered offer remaining at the close of spot trading. The spot price initially dropped 8.00 cents before buying interest lifted it off the low. Grade A nonfat dry milk increased 2.75 cents to close at $1.68 with 13 loads traded. Class IV futures are 10-48 cents lower. Butter futures are 4.25-7.50 cents lower. This makes no sense as the increase in nonfat dry milk offset the loss of butter in milk pricing. Dry whey futures are 0.75 cent lower to 0.52 cent higher. Cheese futures are 0.60-3.10 cents lower.

Friday Morning Dairy Market Update - Milk Futures Show Substantial Pressure Overnight

OPENING CALLS:

Class III Milk Futures:	10 to 25 Lower
Class IV Milk Futures:	4 to 8 Lower
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	3 to 5 Higher
Soybean Futures:	8 to 11 Higher
Soybean Meal Futures:	$2 to $3 Higher
Wheat Futures:	15 to 18 Higher

MILK:

The minor strength in the block cheese price Thursday did not support Class III futures. Traders anticipate cheese prices to retrace and are not buying into the recent strength. Continued strong milk production will keep a sufficient supply available for bottling and manufacturing. The uncertainty of the outside markets continues to fuel the uncertainty of demand and the potential for milk prices. The overnight Class III futures showed losses of 8-48 cents. It is unusual to see losses in the 30- to 40-cent range in overnight activity. That may be a bit excessive ahead of spot trading, but does paint a bearish picture for Friday.

CHEESE:

Some of the bearishness of overnight trade in Class III futures may be the result of the January Dairy Products report showing strong cheese output during the month compared to a year ago. This output will only increase with increased cow numbers and higher milk production. This is expected to keep cheese inventory above a year ago through the first half of the year.

BUTTER:

The spot butter price increase on Thursday took place on unfilled bids. That would suggest the price may increase further Friday. Buyers may want to increase ownership in preparation for continued strong demand. The significant increase in butter output in January is increasing inventory, but supplies remain significantly lower than a year ago.