Thursday Midday Dairy Market Update - Block Cheese Shows Further Weakness

OUTSIDE MARKETS SUMMARY:

CORN:	Unchanged
SOYBEANS:	6 Higher
SOYBEAN MEAL:	$1.90 Higher
LIVE CATTLE:	$0.32 Lower
DOW JONES:	365 Points Lower
NASDAQ:	345 Points Lower
CRUDE OIL:	$4.53 Higher

MIDDAY MARKET UPDATE:

The block cheese price decreased 2.00 cents to close at $1.6200 with one load traded. The barrel cheese price remained unchanged at $1.5725 with no loads traded. Traders may be rethinking their bullish expectations of the market due to cheese inventory in February being below that of a year ago. It has not been reflected in the spot market. The dry whey price increased a penny, closing at 69.00 cents with one load traded. Class III futures are 13 cents lower to 10 cents higher. The butter price increased 2.75 cents to close at $1.8450 with 16 loads traded. The price moved to $1.8625 and then met more aggressive selling, which moved the price off the high. Grade A nonfat dry milk increased 1.50 cents to close at $1.9375 with 12 loads traded. Class IV futures are 19 cents lower to 23 cents higher, with the May and June contracts solidly above $21.00. Butter futures are 2.50 cents lower to 4.85 cents higher. The only loss is in the nearby March contract, with only one load traded. Dry whey futures are 0.05 cent lower to 0.50 cent higher. Cheese futures are 1.10 cents lower to 0.1 cent higher.

Thursday Morning Dairy Market Update - Traders Remain Optimistic

OPENING CALLS:

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

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	Mixed
Soybean Futures:	Mixed
Soybean Meal Futures:	$1 to $3 Lower
Wheat Futures:	3 to 4 Lower

MILK:

Traders feel confident about continued support for milk prices based on the February Cold Storage report showing American cheese, total cheese, and butter inventories below a year ago. The weakness in the block cheese price on Wednesday had no impact on Class III milk futures. The strength in dry whey and optimism over better milk prices provided the support for traders to be aggressive buyers. This optimism continued in the overnight trade, but may run into resistance as traders may take profits on long positions in case of further weakness in the underlying cash. The pattern of the past few months suggests this possibility.

CHEESE:

It was interesting the block cheese price declined even though the Cold Storage report was supportive of the market. However, the spot maket is what is happening currently. Increased cheese production in March may have added significantly to inventory.

BUTTER:

Surprisingly, the butter price is not being supported due to inventory being substantially below a year ago. Buying interest is strong in the spot market, but manufacturers are aggressively moving supplies. This keeps the supply readily available for the market.

Wednesday Closing Dairy Market Update - May Class IV Closes Above $21

GENERAL OVERVIEW:

Milk futures posted a very strong day on Wednesday. Traders moved Class III futures higher in overnight trade in reaction to the Cold Storage report. That strength continued throughout the day despite the weakness of the block cheese price. Class IV futures were supported.

MILK:

The strength in Class III futures moved the June and later contracts to new highs. The gains on Wednesday were more from the optimism garnered from the February Cold Storage report, showing American and total cheese inventory below a year ago, and not what the actual spot market did. What we can see is that the market is absorbing increased milk production due to strong demand. The market appears to have solid support, and any weakness of the underlying cash may be short-lived. Class III futures are not far from reaching above $19 in later contracts. Class IV futures showed the May and June contracts moving above $21, but could not hold the full gains, with only May closing above $21.

AVERAGE CLASS III PRICES:

3 Month:	$17.33
6 Month:	$18.00
9 Month:	$18.26
12 Month:	$18.13

CHEESE:

Interestingly, the regions report that cheese production is strong and increasing, yet inventory is below a year ago. Spot milk is plentiful due to some plants diverting milk due to maintenance downtime. This is being scheduled ahead of the spring flush that is beginning to take place. After being stronger last week, spot milk prices are as much as $6 under class. Domestic demand is strengthening through retail outlets. International demand remains strong.

BUTTER:

Cream remains plentiful but is less available to butter manufacturers than it has been. Ice cream production is increased along with other Class II products. There is no concern over a shortage despite February inventory being 17% below a year ago. Trading activity has been strong this week in the spot market, with 87 loads already traded during the first three days.

OUTSIDE MARKETS SUMMARY:

May corn closed up 4.75 cents per bushel at $4.6725, May soybeans closed up 16.75 cents at $11.7175, and May soybean meal closed down $2.60 per ton at $319.80. May Chicago wheat closed up 7.75 cents at $5.9775. June live cattle closed down $0.75 at $233.85. May crude oil is down $0.98 per barrel at $91.37. The Dow Jones Industrial Average is up 305 points at 46,429, with the NASDAQ up 168 points at 21,930.