Tuesday Closing Dairy Market Update - Milk Uptrend Continues

MILK

Milk prices are expected to continue to hold or gain as there is no significant jump in production expected for a while, despite cooler temperatures on the horizon. School milk demand is really just getting started and we have a while before the fall and winter production increases. Class III futures closed 12 to 40 cents higher.

AVERAGE CLASS III PRICES

3 Month:	$21.96
6 Month:	$21.79
9 Month:	$21.00
12 Month:	$20.52

CHEESE

Not a lot of volume was traded in the cash market for blocks or barrels today, however futures had slight increases. It is anticipated that cheese will remain higher until milk production increases later this year.

BUTTER

Butter futures followed the cash prices today and had a small sell-off from the highs we saw last week. Not everything can rally forever, but it is still believed that we will see supported prices with the inventory levels and production we see today.

OUTSIDE MARKETS SUMMARY

December corn closed up 8.25 cents per bushel at $4.0925, November soybeans closed up 12.00 cents at $10.12 and December soybean meal closed up $8.10 per ton at $321.10. December Chicago wheat closed up 15 cents at $5.6650. October live cattle closed up $0.675 at $179.275. October crude oil is down $3.32 per barrel at $70.22. The Dow Jones Industrial Average is down 626 points at 40,936 with the NASDAQ down 577 points at 17,136.

Tuesday Midday Dairy Market Summary - Block Cheese Futures Inch Even Higher

OUTSIDE MARKETS SUMMARY:

CORN:	8 Higher
SOYBEANS:	17 Higher
SOYBEAN MEAL:	$9.30 Higher
LIVE CATTLE:	$0.90 Higher
DOW JONES:	45 Points Lower
NASDAQ:	48 Points Lower
CRUDE OIL:	$3.25 Lower

MIDDAY MARKET UPDATE:

The block cheese price closed 0.50 cents higher closing at $2.2150 with one load traded. Making another new high from Friday's nearly two-year high. The barrel cheese price was unchanged closing at $2.26 with 1 load traded. There was an unfilled bid for one load of barrels. The dry whey price ended 1 cent higher at 57 cents with one load traded. Class III futures are 1.5 cents to 3.5 cents higher. The butter price lost 1.75 cents at 3.1525 with 13 loads traded. Grade A nonfat dry milk gained 1.25 cents closing at $1.3425 with six loads traded. Class IV futures are 1-15 cents higher. Butter futures are 1.25 cent lower to 3.25 cents lower. Dry whey futures have not yet traded today.

Tuesday Morning Dairy Market Update - Traders Will Be Cautious Ahead of Cash Trade

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	4 to 8 Higher
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

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

MILK:

Overnight trade indicates traders will continue to support deferred contracts. The strength of underlying cash cheese Friday may continue Tuesday as the strength may increase buying interest. The current level of milk production is adequate to meet the needs of the industry, but there is concern the supply could tighten as demand increases. Milk production may remain below a year ago if the current trend continues. Cow numbers are not expected to increase significantly due to a tight supply of replacements. Culling is slowing but production per cow may not improve as it usually does when new heifers continue to enter the herds.

CHEESE:

The large increase in cheese prices Friday may bring more buyers into the market as they become concerned over the upside price potential. The strategy of holding back to purchase on price declines may not be advantageous anymore as price breaks may not happen in the near term. Waiting for a break to purchase has resulted in paying more for cheese.

BUTTER:

The butter price is supported and likely will find further buying interest this week. Demand is improving seasonally, which should increase the demand on the cash market. The higher inventory may not last long if demand improves and churning remains at the current level.