Thursday Midday Dairy Market Summary - Butter Shows Further Strength

OUTSIDE MARKETS SUMMARY:

CORN:	3 Higher
SOYBEANS:	9 Higher
SOYBEAN MEAL:	$2.90 Higher
LIVE CATTLE:	$1.60 Lower
DOW JONES:	59 Points Lower
NASDAQ:	82 Points Higher
CRUDE OIL:	$0.28 Higher

MIDDAY MARKET UPDATE:

The block cheese price declined 1.00 cent to close at $1.4875 with two loads traded. The price did trade down to $1.4850 during spot trading before coming back. The barrel cheese price remained unchanged at $1.44 with no loads traded. The dry whey price remained unchanged at 69.00 cents with no loads traded. Class III futures are 11 cents lower to 7 cents higher. The butter price gained 1.50 cents to close at $1.6350 with 30 loads traded. The price ranged from $1.6250 to $1.6700 during the spot trading period. There were 6 unfiled bids and 30 uncovered offers remaining at the close of spot trading. This may indicate the upside may be limited. Grade A nonfat dry milk slipped 0.75 cent to close at $2.0850 with 15 loads traded. Class IV futures are 7-50 cents higher. Butter futures are 0.80 -- 3.12 cents higher. Dry whey futures are 0.60 -- 0.90 cent higher. Cheese futures are 1.00 cent lower to 0.40 cent higher.

Thursday Morning Dairy Market Update - Traders Uncertain Over Continued Strength

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	10 to 20 Higher
Butter Futures:	1 to 2 Higher

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	4 to 5 Higher
Soybean Futures:	9 to 10 Higher
Soybean Meal Futures:	$1 to $2 Higher
Wheat Futures:	3 to 4 Higher

MILK:

Class III futures had some minor support on Wednesday from the increase in the block cheese price, but traders were not confident enough to buy futures aggressively. The decline in the barrel cheese price was a surprise, but it may have provided indirect concern for traders. The barrel cheese price has no influence on the calculation of the Class III price. Class IV futures were very strong as the increase in butter and nonfat dry milk prices triggered significant buying interest. The milk supply certainly is not lacking, keeping bottling and manufacturing active. More milk is being diverted to manufacturing as schools close for the summer.

CHEESE:

Cheese supplies remain plentiful. This will continue as more milk is moving to the vat. Cheese inventory is increasing, but remains slightly below a year ago. This is of no concern to buyers as there is sufficient available for demand.

BUTTER:

The increase in the butter price was the largest one-day increase we have seen for a while. Traders remain cautious over the upside potential. Butter futures were higher on Wednesday, but the gains were limited as there seems to be little reason to believe the strength will continue. Sellers may be aggressive in the spot market as they take advantage of the higher price.

Wednesday Closing Dairy Market Update - Butter Prices Rally

GENERAL OVERVIEW:

Trade activity in the butter market seemed to be the highlight of the session Wednesday as prices quickly bounced off nearly 4-month lows. Milk futures were limited to single-digit price shifts, with very limited market direction developing in any contract months.

MILK:

Milk futures remained mixed Wednesday in very limited trade activity in all nearby and deferred contracts. The limited volume across the entire complex seems to be focused on current milk production levels, which are ample for current and expected short-term demand. But the onset of more summerlike weather in several production areas is causing some speculation that milk production will see seasonal pressure due to heat stress if this trend continues. June contracts are the most active contracts, falling 8 cents per cwt, moving to $16.52 per cwt. July through December contracts were able to etch higher, although limited gains and trade volume were seen in all contracts. The focus on strong domestic and export demand continues to help solidify price levels in the current market range, although it may take a significant shift in order to draw additional long-term support into the market through the summer months.

AVERAGE CLASS III PRICES:

3 Month:	$16.70
6 Month:	$17.30
9 Month:	$17.55
12 Month:	$17.56

CHEESE:

Cash cheese prices were mixed on the daily CME exchange Wednesday. Block cheese prices posted a total of 8 loads selling during the exchange market, while prices continued to etch higher, moving to $1.4975 a pound, following a 0.5 cent-per-pound gain. Barrel cheese prices on the other hand backed away from previous market support, falling 3 cents per pound in limited trade activity. A total of 2 loads of barrel cheese sold on the exchange. In the most recent USDA cheese highlights report, Northeast milk production is strong, with cheesemakers running full schedules on contracted milk. Class III spot milk and condensed skim are scarce. May sales are improving, retail demand is lighter, bulk cheese demand is firm, and export interest exceeds supply. Central milk output is steady and above last year. Cheesemakers are running full schedules. Spot Class III milk is $6 under to $1 over Class. Holiday production levels are factoring into price variance for spot milk. Domestic demand is stronger and exports remain steady. Western milk production is meeting expectations, but is tight in some areas. Spot milk demand is moderate. Cheese production ranges steady to lighter ahead of the holiday and spot inventories remain tight. Domestic demand is steady while export demand is steady to strong.

BUTTER:

Cash butter prices quickly bounced higher Wednesday morning on the exchange. Following setting nearly 4 month market lows earlier in the week when traders returned from the long holiday weekend, buyer support has regained momentum during the last week of May. Butter supplies still remain readily available, and milk supplies moving to butter churns are far from short through the spring. But buyers seem to be aggressively willing to purchase at lower prices following the market decline. Cash butter prices surged 6 cents per pound in the last day, with another 14 loads exchanging hands during the session. This accounts for a weekly total of 50 loads, with two more trading days yet this week and month.

OUTSIDE MARKETS SUMMARY:

July corn closed down 5.00 cents per bushel at $4.5250, July soybeans closed down .75 cent at $11.8525 and July soybean meal closed up $2.00 per ton at $330.60. July Chicago wheat closed down 13.00 cents at $6.2250. August live cattle closed up $3.35 at $242.50. July crude oil is down $4.42 per barrel at $89.47. The Dow Jones Industrial Average is up 182 points at 50,644 and NASDAQ is up 18 points at 26,674.