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.

Monday Midday Dairy Market Summary - Block Cheese Jumps to Two-Month High

OUTSIDE MARKETS SUMMARY:

CORN:	3 Higher
SOYBEANS:	8 Higher
SOYBEAN MEAL:	$2.80 Lower
LIVE CATTLE:	$0.10 Lower
DOW JONES:	109 Points Lower
NASDAQ:	367 Points Lower
CRUDE OIL:	$5.25 Higher

MIDDAY MARKET UPDATE:

The block cheese price Increased 5.25 cents to close at $1.60 with 9 loads traded. The barrel cheese price remained steady at $1.56 with one load traded. The dry whey price decreased a penny to close at 68.00 cents with no loads traded. Class III futures are 2-47 cents higher. The butter price decreased a penny to close at $1.6400 with 17 loads traded. The price initially gained 0.75 cent before sellers became more aggressive. Grade A nonfat dry milk slipped 0.25 cent to close at $1.5525 with 5 loads traded. The price initially increased 0.50 cent, but could not hold the gain. Class IV futures have only traded in the August contract at 18 cents higher, and that was before spot trading. The current offer is lower than that price. Butter futures are steady to 2.30 cents lower. Dry whey futures are 0.50 -- 0.62 cent higher. Cheese futures are 0.20 -- 3.60 cents higher. Nonfat dry milk futures are 1.12 cents lower to 1.00 cents higher.

Monday Morning Dairy Market Update - Spot Prices Should Remain Supported

OPENING CALLS:

Class III Milk Futures:	3 to 5 Higher
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	2 to 5 Higher
Soybean Futures:	6 to 9 Higher
Soybean Meal Futures:	$1 to $2 Higher
Wheat Futures:	2 to 3 Lower

MILK:

Milk futures showed some nice strength last week, but it may not continue unless buyers remain aggressive in the spot market. There is little for traders to get excited over fundamentally. However, buyers may step up more aggressively to seasonally purchase, looking ahead to later demand. The hot weather this week in many parts of the country may also trigger some psychological buying as milk production will be impacted. Milk receipts at the plant level are expected to decrease, which may increase milk prices on the spot market as plants look for extra milk to keep plants running full.

CHEESE:

Cheese buyers may be more aggressive Monday to begin the week as buyers look ahead to later demand and want to increase their inventory. However, there may be a limitation as to how aggressive they will be due to sufficient cheese production and supplies. The upside price potential may be limited.

BUTTER:

The steady cash price last week may indicate supply and demand may be balanced. Sellers may offer butter on the spot market, but may not be aggressive sellers as they see improved retail demand. Reduced churning activity due to lower cream supplies may increase buying interest.