Wednesday Morning Dairy Market Update - Dairy Traders Wait for Price Direction

OPENING CALLS:

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

OUTSIDE MARKET OPENING CALLS:

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

MILK:

The current fundamentals of the dairy market are seasonal. The spring flush brings increasing milk supply and schools will close for the summer over the next few weeks. More milk will move to manufacturing, keeping plants running on full schedules. Increased cow numbers and higher production per cow may keep milk production above a year ago. The replacement heifer supply is tight, but culling is lower, allowing farms to keep stalls full. The outlook for milk prices has improved over the past few weeks, but higher milk prices may be difficult to achieve without an increase in demand.

CHEESE:

Cheese prices may maintain a sideways pattern for a time as buyers see no need to be aggressive and sellers feel comfortable at current prices. There is no concern over a tighter supply leaving buyers unaggressive and sellers want to move supply to limit the increase of inventory at the plant level.

BUTTER:

Buyers and sellers are comfortable doing business at the current price level. Buyers have been able to purchase butter at lower prices and have put it in inventory for later demand. This may limit upside potential as the buyers will not need to be as aggressive later in the year. However, the price is expected to increase seasonally, with butter futures suggesting the price to reach $2.62 by November.