Friday Morning Dairy Market Update - Spot Prices to Remain Choppy

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	5 to 10 Higher
Butter Futures:	1 to 2 Higher

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 2 Lower
Soybean Futures:	4 to 5 Higher
Soybean Meal Futures:	Steady to $1 Lower
Wheat Futures:	1 to 2 Lower

MILK:

There is not much change in the direction of milk futures Friday. It is unlikely Class III futures will find strong buying interest. If the spot cheese price increases, traders will be skeptical of the gain. The supply of cheese is sufficient to meet demand, with strong output continuing. Class IV futures may post further gains depending on the butter price. Milk production remains strong and, so far, has not been negatively impacted by the weather. The USDA will release the April Agricultural Prices report Friday. This provides average prices for the month on a wide array of agricultural products. The report contains most of the prices used to calculate income over feed for the Dairy Margin Coverage program. The average soybean meal price is not in the report and will be released by the FSA on Monday.

CHEESE:

There is little expectation for cheese prices to increase. If they do, there may be limited upside potential. Buyers are complacent with expectations that supplies will remain readily available. Manufacturers continue to move cheese to the spot market to keep inventory from building at the plant level.

BUTTER:

The amount of uncovered offers remaining at the close of spot trading Thursday suggests there will be limited upside potential for the price. However, buyers purchased quite a few loads on Thursday, and the price increased. The same could take place Friday. 

Thursday Closing Dairy Market Update - Strong Day for Class IV

GENERAL OVERVIEW:

Milk futures closed much as they traded since spot trading was finished. Milk production in some areas of the country is close to the spring flush peak but is expected to remain higher for a longer duration. The April Agricultural Prices report will be released on Friday.

MILK:

Class III milk futures could not find further support after spot trading closed the day mixed. The weakness of the block cheese price did not generate aggressive buying interest. However, Class IV futures showed substantial strength as traders focused on the increase in price and the trading activity in butter. A substantial volume of butter traded in the spot market, but the price closed higher. Milk production in the Northeast and Central regions continue to increase due to the spring flush, but there are indications that it is nearing its peak. USDA will release the April Agricultural Prices report tomorrow. It contains the average prices used to calculate income over feed for the Dairy Margin Coverage program.

AVERAGE CLASS III PRICES:

3 Month:	$16.68
6 Month:	$17.26
9 Month:	$17.51
12 Month:	$17.53

CHEESE:

Cheese output schedules are strong as plants utilize the available milk supply. This leaves sufficient supply available for demand. Spot milk prices remain variable in a wide range, with prices ranging from $5.00 under class to $2.00 over class. Retail demand is termed as strong and, in some cases, increasing. However, food service demand remains lighter than usual.

BUTTER:

The butter price showed strong initial gains but could not hold the highs due to the substantial volume of loads offered to the market during spot trading. Some plants in the Southeast are bringing in cream to supplement regional supplies as the weather is impacting cream supplies. This is not expected to have a significant impact on the butter price in the near term.

OUTSIDE MARKETS SUMMARY:

July corn closed up 3.25 cents per bushel at $4.5575, July soybeans closed up 9.25 cents at $11.9450, and July soybean meal closed up $3.50 per ton at $334.10. July Chicago wheat closed up 1.50 cents at $6.2400. August live cattle closed down $1.50 at $241.00. July crude oil is up $0.22 per barrel at $88.90. The Dow Jones Industrial Average is up 25 points at 50,669, with NASDAQ up 243 points at 26,917.

Fluid Milk and Cream - Western U.S. Report 22

California handlers report steady or lighter milk production for week 22. Milk production is down from the previous month, but up yearover-year. Central Valley stakeholders report balanced milk volumes. Although some manufacturers indicate milk intakes below anticipated volumes, spot milk loads are available for buyers to secure. 

Arizona and New Mexico farm level milk output is steady. Spot milk loads are somewhat tight. 

Pacific Northwest milk production is steady. Manufacturers indicate milk volumes are tight. 

Handlers in the Mountain States of Idaho and Utah report close to ideal temperatures for cow comfort and steady farm level milk output. Handlers in Colorado indicate farm level milk output varies from steady to lighter. In many areas of the West region snowpacks were not heavy and stakeholders voiced nervousness about water resources for the remainder of this year. Some stakeholders throughout the region report increasing milk hauling rates. Class I demand is lighter with the start of summer breaks at educational institutions. Class II, III, and IV demands are steady. 

Cream demand and availability are steady. Cream multiples are unchanged for week 22. Condensed skim milk availability and demand are unchanged.