Tuesday Closing Dairy Market Update - Walmart Opens Third Milk Processing Facility

GENERAL OVERVIEW:

At least there was some life in milk futures today. Class III futures increased, correcting from the large declines over the past week. Class IV jumped due to the strength of butter and nonfat dry milk in the spot market. Walmart opens its third milk processing facility.

MILK:

It was encouraging to see some higher milk futures prices today after a week of pressure. Class III futures increased due to the market being overdone to the downside, as the underlying cash did not support its strength. Class IV futures increased from higher butter and nonfat dry milk prices. Futures have a long way to go to regain the losses and will need to see further support from the underlying cash, or they will be unable to maintain the strength. The current market fundamentals do not suggest any supply tightness in cheese or butter. The supply tightness is clearly evident in nonfat dry milk as it moved to another all-time high today. Even at the high price, demand is strong, with buyers not reaching a threshold. The level at which demand will slow is uncertain and will be higher than it is now. Walmart opened its third milk processing facility in Robinson, Texas. Their first facility was in Fort Wayne, Indiana, with the second last year in Valdosta, Georgia. They continue to invest in processing and distribution to develop an end-to-end supply chain for milk.

AVERAGE CLASS III PRICES:

3 Month:	$17.48
6 Month:	$18.07
9 Month:	$18.08
12 Month:	$17.94

CHEESE:

The block cheese price shows little direction. Business is being done as buyers and sellers see fit. There is little reason for buyers to be aggressive as there is for sellers. International demand is strong, and although the volume is substantially higher than a year ago, it is not providing substantial support to the market. The expectation is for the price to remain rangebound for the near term..

BUTTER:

The bounce butter is being met with skepticism, as the pattern has been that weakness follows an increase. The result has been new lows as sellers again turn aggressive. This pattern will cease at some point, but it is uncertain if this will be the time. The prices should be low enough to generate strong buying interest, but sellers continue to offer supplies to the market at whatever price is needed to move supplies.

OUTSIDE MARKETS SUMMARY:

July corn closed down 5.75 cents per bushel at $4.8000, July soybeans closed down 11.25 cents at $12.1150, and July soybean meal closed down $.50 per ton at $320.40. July Chicago wheat closed down 13.25 cents at $6.2775. June live cattle closed up $1.48 at $253.23. June crude oil is down $4.15 per barrel at $102.27. The Dow Jones Industrial Average is up 356 points at 49,298, with the NASDAQ up 258 points at 25,326.

Tuesday Midday Dairy Market Summary - Traders Cautious over Butter Rebound

OUTSIDE MARKETS SUMMARY:

CORN:	8 Lower
SOYBEANS:	12 Lower
SOYBEAN MEAL:	$2.20 Higher
LIVE CATTLE:	$1.05 Higher
DOW JONES:	248 Points Higher
NASDAQ:	218 Points Higher
CRUDE OIL:	$4.20 Lower

MIDDAY MARKET UPDATE:

The block cheese price declined 0.25 cent to close at $1.63 with sixteen loads traded. There were no unfilled bids or uncovered offers remaining at the close. The barrel cheese price remained unchanged at $1.6150 with no loads traded. The Dry whey price remained unchanged at 69.50 cents with no loads traded. Class III futures are 1 cent lower to 11 cents higher. The butter price rebounded to recover the losses on Monday and then some, with the price increasing 5.50 cents to close at $1.61 with ten loads traded. There were no unfilled bids or uncovered offers remaining at the close. Grade A nonfat dry milk gained 2.00 cents to close at $2.2825 with six loads traded. This sets a new record high for nonfat dry milk. Class IV futures are 12-53 cents higher. Butter futures are 0.27 cent lower to 4.37 cents higher as traders are cautious over the price rebound. Dry whey futures are 0.42 cent lower to 0.80 cent higher. Cheese futures are 0.60 cent lower to 0.70 cent higher.

Tuesday Morning Dairy Market Update - Weakness May Prevail

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 2 Lower
Soybean Futures:	3 to 5 Lower
Soybean Meal Futures:	$1 to $2 Lower
Wheat Futures:	3 to 5 Lower

MILK:

There is not much to be said about the milk market as the fundamentals remain the same. It seems continued strong milk production is fully impacting the market. The weakness of the past week has been substantial and has eliminated a lot of value. The milk supply will need to tighten due to an increase in demand before milk futures may find support. We have seen counter-seasonal movement since last fall, but will we see it through the spring flush season? The current market fundamentals do not suggest this will be the case. The movement of milk futures over the past week dims the outlook for prices for the year.

CHEESE:

Cheese prices are expected to remain in a range. Cheese production has increased due to high milk receipts. This will continue as milk production is expected to exceed last year throughout the rest of the year. It is uncertain whether demand will hold due to higher prices for all food and other goods, as consumers have less buying power.

BUTTER:

Butter demand is good, but not good enough to tighten the supply. Strong butter production due to the abundance of cream and milk is keeping the market well supplied. International demand has been strong and is expected to remain strong, but that is not enough to tighten the supply. The market has yet to find support.