Tuesday Morning Dairy Market Update - Buying Continued in Milk Futures Overnight

OPENING CALLS:

Class III Milk Futures:	6 to 10 Higher
Class IV Milk Futures:	5 to 10 Higher
Butter Futures:	1 to 2 Higher

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 2 Lower
Soybean Futures:	1 to 3 Lower
Soybean Meal Futures:	$1 to $2 Higher
Wheat Futures:	3 to 4 Lower

MILK:

The outlook for milk prices for the rest of the year improved substantially on Monday as underlying cash prices rebounded. This pushed futures to new contract highs. Buyers of cheese and butter stepped up to purchase at the lower prices of last week, but their aggressive activity resulted in limited purchases but substantial price gains. The milk supply is decreasing seasonally, but there remains sufficient for demand. The friendly cold storage report increased the buying interest of end users as they saw inventory decline and stocks at a lower level than a year ago.

CHEESE:

The gains in barrels outpaced the increase in blocks, moving the spread to an inverted 11 cents. Buyers may now remain more aggressive as they look ahead to upcoming demand and the potential for lower inventory and further price strength. This could result in buyers trying to outbid each other.

BUTTER:

The butter price is expected to reach back to the previous high and exceed that level this week as demand shows signs of improving. Butter inventory remained 7% above a year ago on the cold storage report, but the decline for the month was higher than the average. The reduced churning pace and increasing demand may push the price higher in the coming weeks.