Tuesday Midday Dairy Market Summary - Higher Cheese and Dry Whey Prices Fail to Support Futures

OUTSIDE MARKETS SUMMARY:

CORN:	2 Lower
SOYBEANS:	4 Lower
SOYBEAN MEAL:	$0.50 Higher
LIVE CATTLE:	$2.82 Lower
DOW JONES:	41 Points Lower
NASDAQ:	271 Points Higher
CRUDE OIL:	$0.91 Higher

MIDDAY MARKET UPDATE:

The block cheese price increased 0.50 cent to close at $1.6050 with 8 loads traded. The barrel cheese price increased 4.00 cents to close at $1.6000 with 3 loads traded. The dry whey price increased 2.00 cents to close at 70.00 cent with 3 loads traded. Class III futures are 13 cents lower to 1 cent higher. Futures had the gains already factored in, which provided the opportunity for traders to take a short-term profit after 2 days of gains. The butter price remained unchanged at $1.6400 with no loads traded. Grade A nonfat dry milk decreased 2.50 cents to close at $1.5275 with 13 loads traded. Class IV futures are 8-21 cents lower. Butter futures are steady to 2.22 cents lower. Dry whey futures are 0.15 -- 0.50 cent higher. Cheese futures are 1.20 cents lower to 0.50 cent higher. Nonfat dry milk futures are 1.40 cents lower to 0.92 cent higher.

Tuesday Morning Dairy Market Update - Milk Futures May Pull Back Ahead of Spot Trading

OPENING CALLS:

Class III Milk Futures:	5 to 12 Higher
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	5 to 6 Lower
Soybean Futures:	6 to 8 Lower
Soybean Meal Futures:	$2 to $3 Lower
Wheat Futures:	4 to 6 Lower

MILK:

The strength of Monday in Class III futures may carry over Tuesday ahead of spot trading. The buying that took place Monday is likely traders getting into the market in an attempt to take a short-term profit. It would not be surprising to see futures come under some selling pressure ahead of spot trading to bank those profits in the event cheese prices slip back. Higher futures prices are welcome and hopefully the market will find further support. The nearby July contract is nearly priced and will move mainly based on the weekly AMS dairy product prices report. Class III futures are holding a premium in subsequent contracts, while Class IV futures are mostly the same through the end of the year.

CHEESE:

Cheese buyers have turned more aggressive. Demand is good and buyers are looking ahead to prepare for demand later in the year. There is concern the upside price potential may be limited as there is not a shortage of milk moving to the vat. However, increasing prices may bring more buyers from the sidelines to purchase before prices move higher, adding to the strength.

BUTTER:

Butter has not found the support cheese has recently shown. That does cause concern as the butter market has generally been the leader of price direction for cheese. Buyers of butter have been able to purchase sufficient supplies for demand with some reports that inventory is beginning to build slightly.

Monday Closing Dairy Market Update - Bullish Anticipation Surfaces

GENERAL OVERVIEW:

Class III milk futures posted some strong gains following the strength in the block cheese price. Class IV futures held surprisingly well despite the weakness of butter and nonfat dry milk.

MILK:

Class III futures received a boost today with the strength of the block cheese price. There was no specific reason for the strength other than buyers stepping up more aggressively. Some of the buying could be the result of seasonality and some due to the potential for a reduced milk supply in the near-term. It will be difficult to anticipate how much upside potential the market will have in light of the current fundamentals. On one hand, prices are low, which could spur increased buying interest to prepare for later demand. On the other hand, milk cow numbers are high and milk production strong. A decrease in cow numbers is not expected anytime soon, and milk production is expected to continue to exceed that of last year.

AVERAGE CLASS III PRICES:

3 Month:	$16.80
6 Month:	$17.34
9 Month:	$17.37
12 Month:	$17.39

CHEESE:

The block cheese price moved back to the highest level it has been since May. The strength in the prices may increase the interest of other buyers in purchasing ahead of further price increases. Cheese prices at $1.60 are reasonable, and it is prudent to purchase for upcoming demand. Even though current fundamentals do not suggest much upside price potential, purchasing at the current level makes good business sense.

BUTTER:

Butter has not been the recipient of the buying interest that cheese has experienced. Butter demand seems to be stronger than cheese, but buyers have not been as aggressive recently, as supplies are sufficient. There are reports that plants want to build inventory, if possible, to prepare for later demand.

OUTSIDE MARKETS SUMMARY:

December corn closed up 2.25 cents per bushel at $4.6325, November soybeans closed up 4.00 cents at $11.9475, and December soybean meal closed down $3.70 per ton at $315.00. September Chicago wheat closed down 5.00 cents at $6.3525. August live cattle closed down $0.48 at $234.73. August crude oil is up 6.36 per barrel at $77.77. The Dow Jones Industrial Average is down 191 points at 52,451, with the NASDAQ down 424 points at 25,858.