Monday Closing Dairy Market Update - Federal Order Reform a Closer Reality

MILK:

Milk futures struggled again today but they did not wash out. Class III contracts closed mixed but mostly lower. The weakness of barrels keeps a negative tone in the market. It was at least encouraging to see that the market did not wash out today. However, it did not provide much support as contracts closed mixed but mostly lower. The outlook for milk prices does not look good, at least in the near term as May milk moved to a new contract low today even though most of it is already priced. Any response to gains of the underlying cash will be most noted in the June and July contracts. Federal Milk Market Order reform is making progress. The National Milk Producers Federation published its proposal for changes. The proposal included a greater emphasis on proteins, solids and nonfat solids and powder associated with Class III and Class IV pricing. It suggests a discontinuation of the barrel price as a reference price and higher payment for transportation costs associated with Class I milk. It also makes Class III of greater importance in the "make formula". After two years of work, the proposal has been submitted to the USDA which has 30 days to respond to the proposal.

AVERAGE CLASS III PRICES:

3 Month:	$17.07
6 Month:	$18.02
9 Month:	$18.38
12 Month:	$18.42

CHEESE:

There is just too much cheese coming to the market. When the spot market opens for trading, there are low bids placed for both blocks and barrels. Buyers show little interest and wait for sellers to lower their offers before increasing their ownership of supply for later demand. They are content to hold back to see just how badly they wish to move product and their patience has paid off. Cheese remains plentiful.

BUTTER:

Price was poised to break above the sideways trading that has dominated the market so far this year. However, fundamentals are not strong enough to cause the price to trend higher. Buyers and sellers are comfortable in this price range with business being done. Butter production is strong with cream supply sufficient for production.

OUTSIDE MARKETS SUMMARY:

July corn closed steady at $5.9650, July soybeans closed down 2.75 cents at $14.3375 and July soybean meal closed up $.80 per ton at $426.90. July Chicago wheat closed down 6.25 cents at $6.5400. June live cattle closed up $0.50 at $162.43. June crude oil is up 1.82 per barrel at $73.16. The Dow Jones Industrial Average is down 56 points at 33,619 while the NASDAQ is up 22 points at 12,257.