Thursday Morning Dairy Market Update - Milk Futures Could Bounce

OPENING CALLS:

Class III Milk Futures:	Steady to 8 Higher
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	2 to 4 Lower
Soybean Futures:	10 to 14 Lower
Soybean Meal Futures:	Mixed
Wheat Futures:	5 to 8 Lower

MILK:

It looks as if demand for milk has fallen greatly and supplies are over burdensome. Neither of these are correct. Yes, there is evidence demand is showing signs of slowing with some of this being seasonal and some of it due to substantially higher prices at the grocery store. Inflation at a 41-year high is having an impact, not only on dairy but on all areas of the economy. However, milk production is also below year-earlier levels and may be impacted more over the next few weeks as hot weather will be prevalent in many areas of the country. The current bearish attitude in the market may be difficult to overcome unless more aggressive buying interest surfaces in the spot market. Futures prices are ready for a correction.

CHEESE:

Cheese prices seem to have found stability but not strength. Buyers and sellers are doing business at the current level with buyers having no concern over supply tightness or significantly higher prices. Buyers are purchasing as needed rather than adding more to the supplies they already have on hand.

BUTTER:

Price has remained in the $2.90 to $3.00 range for more than a month. This could move below that range if demand from retail and the food service industry continues to slow. There is some indication export demand is also slowing due to continued higher price. However, price should remain supported.