Friday Morning Dairy Market Update - Selling Pressure May Continue

OPENING CALLS:

Class III Milk Futures:	5 to 10 Lower
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 3 Higher
Soybean Futures:	16 to 24 Higher
Soybean Meal Futures:	$3 to $5 Higher
Wheat Futures:	3 to 5 Higher

MILK:

Overnight trading activity indicates pressure may continue in milk futures. Even at the low prices, sellers continue to offer product on the spot market and traders continue to sell more aggressively in the futures market. Even if there is a bounce in underlying cash, it may have limited impact on milk futures. It has been depressing to watch the nearly daily erosion of futures prices out through the rest of this year as well as next year. USDA will release the May Agricultural Prices report Friday afternoon, which will provide most of the prices used to calculate income over feed for the Dairy Margin Coverage program. The average soybean meal price is not on the report but will be released by the FSA later in the day. The Quarterly Grain Stocks report and the Planted Acreage report will also be released at 11 a.m. CDT.

CHEESE:

Plentiful milk supply and increased cheese production keeps cheese coming to the spot market. Cheese is being sold through regular channels to customers with excess coming to the spot market. Sellers have no interest in holding back product waiting for higher prices as they do not want to store supply. With spot milk as low as $1.00 below class since late last year, there is little concern over milk supply tightening any time soon.

BUTTER:

Butter production continues at a steady pace with inventory building. Cream supply remains sufficient, keeping churns busy with plants running on full schedules. Buyers are contracting ahead into the fourth quarter to ensure price and quantity. Price may remain in a sideways pattern for the foreseeable future.