Tuesday Closing Dairy Market Update - Class III Contracts Fall Below $19

MILK:

Class III futures tried to hold somewhat Tuesday, but the pressure from lower block cheese and dry whey just could not get any interest from traders to step in and purchase. There is little reason for buyers of cheese to be excited over any tightness developing in the market. Milk production is sufficient to satisfy demand. Weather has been good for cow comfort, which is leaving milk per cow significantly above a year ago. There continues to be significant discussion over the impact of higher feed prices on milk output, but that is not having an impact on the current market. Much of that will depend on crop production this summer. Crop progress showed 90% of the nation's corn planted compared to last year at 87% and a five-year average of 80%. Crop conditions indicated 61% of the crop is in good/excellent condition compared to 56% a year ago. Soybeans are 75% planted compared to 63% a year ago and a five-year average of 54%. There is 63% of the crop in good/excellent condition compared to 54% a year ago. USDA will release the May Federal Order class prices Wednesday, which will be higher than April's prices. The trade anticipates a Class III price of $18.97 and a Class IV price of $16.22.

AVERAGE CLASS III PRICES:

3 Month:	$17.82
6 Month:	$18.33
9 Month:	$18.27
12 Month:	$18.16

CHEESE:

The weakness of cheese continues to show a bottom has not yet been reached. Traders did not get too excited over the bounce higher in barrels as that has happened a few times only to resume a lower trend. There are plentiful cheese supplies for current demand. Buyers are able to purchase for current needs as well as for expected future demand as sellers continue to offer loads to the market.

BUTTER:

Price continues to hold well as demand from the food service industry continues to utilize a lot of product. Cream supplies are a bit tighter, but there is sufficient supply for demand from various manufactures that utilize cream. Price is 28 cents above block cheese and is expected to hold a substantial premium to cheese for the foreseeable future.

OUTSIDE MARKETS SUMMARY:

July corn jumped 32 cents, closing at $6.8875. July soybeans gained 18 cents, closing at $15.4850 with July soybean meal up $3.20 per ton, closing at $398.70. July wheat jumped 30 cents, closing at $6.9350. June live cattle fell $2.32, ending at $113.55. July crude oil jumped $1.40 per barrel, closing at $67.72. The DOW gained 46 points, closing at 34,575 while the NASDAQ declined 12 points, closing at 13,736 points.

Tuesday Midday Dairy Market Summary - Barrels Found Some Support

Block cheese price declined 2 cents closing at $1.51 with 10 loads traded and 1 unfilled bid below the market. Barrel cheese price increased 0.50 cent closing at $1.5750 with 6 loads traded. Butter price declined 2 cents closing at $1.79 with 6 loads traded. Grade A nonfat dry milk price gained 0.25 cent ending at $1.2950 with 3 loads traded. Dry whey price declined 2.25 cents closing at 60 cents with 2 loads traded. This is the lowest dry whey price since March 16. Class III futures are mostly lower with price ranging from 16 cents lower to 10 cents higher. The only gain is taking place in June. Class IV futures are 14 cents lower. Butter futures are 0.25 cent to 1.22 cents lower. Dry whey futures are 0.75 cent to 1.25 cents lower.

Tuesday Morning Dairy Market Update - Slow Start to the Week

OPENING CALLS:

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

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	10 to 16 Higher
Soybean Futures:	8 to 12 Higher
Soybean Meal Futures:	$2 to $3 Higher
Wheat Futures:	10 to 15 Higher

MILK:

There is not much to say about the dairy market. Underlying cash prices were weaker in all categories last week, and there is no indication much has changed in the market over the weekend. If anything, this could have been a bit more bearish as more milk flowed to manufacturing over the holiday period. Educational institutions have been, and will be, closing down for the summer, putting more milk to manufacturing. The shift may not be as great as usual due to some institutions having not held full time face to face education anyway. Milk production continues to remain strong, keeping both manufacturing and bottling amply supplied. June is dairy month, which has many promotions associated with it. That may help to keep demand strong.

CHEESE:

There has been no indication that cheese markets have found a bottom. Continued weakness last week was a surprise given the low level of cheese prices. The wide price difference between butter and cheese has not been seen for a long time. Historically, butter was an indicator of price strength of cheese, but that is not the case and has not been the case for a while.

BUTTER:

Supply and demand seem to be balanced in the market keeping price somewhat sideways. Strong demand from the food service industry continues offsetting some of the weakness of retail demand. Butter futures carry some premium to cash in anticipation of strength of price as time progresses.