Tuesday Morning Dairy Market Update - Selling Pressure Continues

OPENING CALLS:

Class III Milk Futures:	10 to 25 Lower
Class IV Milk Futures:	5 to 15 Lower
Butter Futures:	1 to 2 Lower

OUTSIDE MARKET OPENING CALLS:

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

MILK:

Pressure continued in Class III futures overnight as the decline of spot prices Monday increased the concern over price potential. There is a sense that the downside price weakness may be limited, but that does not eliminate the concern over where the market will move to before it rebounds. Milk production will not slow down due to a dip in milk futures. In fact, milk production is increasing seasonally with the potential to move above year earlier levels over the next few months. Tuesday is the last day to trade April dairy futures and options with the Federal Order class prices announced Wednesday. The Global Dairy Trade auction will take place today.

CHEESE:

Sellers continue to bring product to the spot market, allowing buyers to purchase supply for immediate demand as well as purchase for future needs. Without the need for buyers to be aggressive, the market has little reason to move higher. Cheese production is steady and able to meet demand.

BUTTER:

Price rebounded later last week but may resume the trend lower. There is sufficient supply to meet demand as well as build inventory. It is unlikely inventory will surpass the level of last year, but supply will remain sufficient. Retail demand continues to show some weakness.

Monday Closing Dairy Market Update - Class III Futures Take Another Beating

MILK

It seems bullish traders have thrown in the towel for the time being as underlying prices continue to show overall weakness. Milk production is improving seasonally, but production certainly is not overwhelming the market. Overall milk prices should remain supported, but prices may have been too high based on current fundamentals. All farmers would like to see much higher prices, and in reality, prices are higher historically. However, significant increases in the cost of production do not make it as profitable as it looks. The income-over-feed price for the month of March indicates strong income over the cost of feed, but that is not a real picture of profitability in the current market situation. It does provide a benchmark that we can look at as far as income over feed is concerned at current prices. Milk prices are not expected to fall apart but may have a further price retracement before buyers may step back up to the plate in the spot market. Corn planting is 14% complete compared to 42% a year ago and a five-year average of 33%. Soybean progress is at 8% complete compared to 22% a year ago and a five-year average of 13%.

AVERAGE CLASS III PRICES

3 Month:	$24.29
6 Month:	$24.00
9 Month:	$23.56
12 Month:	$22.95

CHEESE

Cheese prices have resumed some of their weakness as sellers are bringing supply to the market while buyers hold back waiting to purchase at lower prices. It is uncertain just how much further prices will weaken, but the consensus is that downside risk might be limited. Cheese futures are not keeping any premium in the market but are declining right along with the decline of spot prices. Traders see no reason to keep premium in the market.

BUTTER

Some slowing of retail demand is being seen, but is nothing to get too excited about. Buyers continue to purchase for orders that are being placed for later in the year as well as increasing ownership for expected demand through the end of the year. There is little concern over supply at present with churning remaining rather active.

OUTSIDE MARKETS SUMMARY

May corn declined 5.25 cents, closing at $8.13. May soybeans fell 34.25 cents, closing at $16.74, with May soybean meal gaining $2.40 per ton, closing at $442.90. May wheat slipped 0.25 cent, ending at $10.4350. June live cattle jumped $2.55, closing at $135.20. June crude oil gained $0.40, closing at $105.17 per barrel. The Dow gained 84 points, closing at 33,062, while the NASDAQ gained 201 points, ending at 12,536.

Monday Midday Dairy Market Summary - Spot Prices Decline

OUTSIDE MARKETS SUMMARY:

CORN:	12 Lower
SOYBEANS:	40 Lower
SOYBEAN MEAL:	$1.10 Lower
LIVE CATTLE:	$2.45 Higher
DOW JONES:	318 Points Lower
NASDAQ:	87 Points Lower
CRUDE OIL:	$0.36 Higher

MIDDAY MARKET UPDATE:

Block cheese price declined 2.25 cents, ending at $2.3475 with two loads traded. Barrel cheese price declined 4 cents, ending at $2.30 with 10 loads traded. All who came to the market to do business went home satisfied as there were no unfilled bids or uncovered offers remaining at the close. Dry whey price declined a penny, ending at 59.50 cents with two loads traded. Butter price slipped 0.75 cent, closing at $2.6675 with five loads traded. Grade A nonfat dry milk price closed at $1.75, down 0.50 cent with one load traded. This put substantial pressure on Class III futures with contracts unchanged to 49 cents lower. Class IV futures are 13 to 20 cents lower. Butter futures are 1.00 to 2.80 cents lower. Dry whey futures are 0.20 to 1.97 cents lower. The activity today cast an overall near-term bearishness on the market.