Friday Closing Dairy Market Update - Fluid Milk Sales Decline 0.7%

MILK

Class III milk futures were hit hard with June falling further than it had been two days ago even though block cheese prices did not erase all the gains of Thursday. This shows the bearishness of traders. Price increases only amount to be short covering as traders take profits when underlying cash prices bounce. Spring flush is near its peak -- or off its peak in some areas -- but that is not expected to tighten milk supply anytime soon. More milk is now available for manufacturing, as schools are closed for the summer. This makes up for some of the shortfalls that might be seen due to hot weather affecting milk production. Low milk prices will be offset to some extent by another large Dairy Margin Coverage program payment. Those who are not over the 5-million-pound cap will receive a check for $3.66 per cwt to add to the April income. Fluid milk sales in March declined 0.7% from a year earlier. Whole milk sales increased 2.1%, flavored while milk sales fell 12.1%, reduced-fat milk declined 1.3%, low-fat milk declined 4.9%, fat-free skim milk declined 6.2%, flavored fat-reduced milk declined 7.5%, buttermilk sales increased 0.4% with other fluid milk products up 27.0%. Organic whole milk sales gained 5.2%, organic flavored whole milk fell 30.5%, organic reduced-fat milk declined 4.3% and organic low-fat milk increased 2.6%. Organic fat-free sales declined 4.5%, organic flavored fat-reduced sales jumped 24.4% with other organic fluid milk products down 47.9%.

AVERAGE CLASS III PRICES

3 Month:	$16.14
6 Month:	$17.19
9 Month:	$17.48
12 Month:	$17.59

CHEESE

For the week, blocks declined 4.75 cents with 25 loads traded. Barrels increased 2.25 cents with 35 loads traded. Dry whey increased 0.25 cent with 37 loads traded. Good demand is being seen, but that is having little impact on overall supply. Inventory has not grown so far this year, but that has not been enough to support prices. Inventory should decrease during the second half of the year unless supply and demand remain as they are.

BUTTER

For the week, butter gained 1.50 cents with six loads traded. Grade A nonfat dry milk remained unchanged with six loads traded. It seemed like price was beginning to develop a possible uptrend, but that may not be the case, as price dropped back Friday. It seems like we will be moving through the first half of the year with price entrenched in a sideways pattern.

OUTSIDE MARKETS SUMMARY

July corn closed up 16.50 cents per bushel at $6.0900, July soybeans closed up 23 cents at $13.5250 and July soybean meal closed down $3.60 per ton at $397.80. July Chicago wheat closed up 8.25 cents at $6.1900. August live cattle closed up $0.53 at $172.90. July crude oil is up $1.64 per barrel at $71.74. The Dow Jones Industrial Average is up 701 points at 33,763, with the NASDAQ is up 140 points at 13,241.