Monday Morning Dairy Market Update - Light Trading Activity Ahead of Cash

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 3 Higher
Soybean Futures:	4 to 8 Higher
Soybean Meal Futures:	Mixed
Wheat Futures:	4 to 6 Lower

MILK:

Class III milk futures eroded further last week with underlying cash providing no support. However, traders may be cautious Monday due to the strength of spot cheese prices Friday. However, the pattern has been that price increases have been short-lived. Traders will not be excited about buying into milk futures based on stronger cheese prices Friday. The milk production report Friday was about as expected as far as milk output for April was concerned. The decline of cow numbers was not surprising as USDA had to compensate for the loss of cows in the barn fire in Texas. However, if the loss of cows is put into the decline of cow numbers from March, it is possible cow numbers might have been about steady. USDA will release the April Cold Storage report Wednesday.

CHEESE:

The strength of cheese prices Friday will be considered as short-lived by the trade unless it is proven otherwise. Sellers continued to bring supply to the market and there is no reason to believe otherwise for this week. Manufacturers continue to move product rather than holding supply in anticipation of a price increase. In fact, they intend to hold a lower supply to reduce storage costs. They see continued sufficient supply of milk being available to the market.

BUTTER:

Butter price is at a point at which it will hold and move further above the sideways trading range or fall back into it. Butter output remains strong as cream is readily available. Demand is steady.