Tuesday Closing Dairy Market Update - Global Dairy Trade Declines 1.6%

MILK:

Just when it seems the market may have found stability, the rug gets pulled out from under it. Milk futures many times magnify the movement of the underlying cash. The decline of spot prices does not indicate the top is in, but likely the move was just a matter of price movement based on who needs to accomplish business on any given day. Milk production is strong, but demand is also improving. The Global Dairy Trade auction took place today with the trade-weighted average declining 1.6% from the previous event. This is the second consecutive decline. There were 16,307 metric tons of products sold at an average price of $4,332 per metric ton. Anhydrous milk fat price increased 1.4% to $7,373 per metric ton or $3.34 per pound. Butter remained steady at $7,811 per metric ton or $3.54 per pound. Buttermilk powder declined 6.1% to $2,834 per metric ton or $1.29 per pound. Cheddar cheese declined 4.2% to $4,759 per metric ton or $2.16 per pound. Lactose declined 2.0% to $1.371 per metric ton or $0.62 per pound. Skim milk powder declined 1.1% to $2,807 per metric ton or $1.27 per pound. Whole milk powder declined 3.7% to $4,173 per metric ton or $1.97 per pound. Mozzarella gained 2.3% to $4,897 per metric ton or $2.22 per pound.

AVERAGE CLASS III PRICES:

3 Month:	$19.07
6 Month:	$19.09
9 Month:	$18.90
12 Month:	$18.76

CHEESE:

The decline of cheese prices may be temporary, with buyers possibly looking to purchase on price weakness. There might be a greater setback as the weakness could have buyers holding back to see how aggressive the sellers will be. Cheese production is increasing as all schools will be closed at the end of this week. More milk is moving to manufacturing.

BUTTER:

Butter should remain supported with price retracement limited. Retail demand is improving, limiting the growth of inventory. Exports are reported to be strong, with the April report to be released in a few days.

OUTSIDE MARKETS SUMMARY:

July corn closed up .25 cent per bushel at $4.3850, July soybeans closed up 7.25 cents at $10.4075 and July soybean meal closed up $.60 per ton at $294.50. July Chicago wheat closed down 3.00 cents at $5.3600. August live cattle closed down $1.25 at $209.75. July crude oil is up $0.89 per barrel at $63.41. The Dow Jones Industrial Average is up 214 points at 42,520, with the NASDAQ up 156 points at 19,399.

Tuesday Midday Dairy Market Summary - Block Cheese Drops

OUTSIDE MARKETS SUMMARY:

CORN:	1 Higher
SOYBEANS:	7 Higher
SOYBEAN MEAL:	$0.20 Higher
LIVE CATTLE:	$0.52 Lower
DOW JONES:	35 Points Higher
NASDAQ:	159 Points Higher
CRUDE OIL:	$1.01 Higher

MIDDAY MARKET UPDATE:

The block cheese price declined 1.75 cents closing at $1.9375 with eight loads traded. The barrel cheese price declined 3 cents, closing at $1.84 with five loads traded. The dry whey price slipped 0.25 cent, closing at 56.25 cents with one load traded. This may indicate that cheese prices may have reached a threshold limiting further upside potential in the near term. Class III futures are 49 cents lower to 2 cents higher. The butter price declined a penny, closing at $2.50 with four loads traded. Grade A nonfat dry milk declined a penny, closing at $1.2775 with three loads traded. Class IV futures traded 4 cents higher in October, and the only contract with trading activity. Butter futures are 0.90 to 4.40 cents lower. Dry whey futures are 1.22 to 1.55 cents lower.

Tuesday Morning Dairy Market Update - Butter May Show Further Strength

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	4 to 8 Higher
Butter Futures:	1 to 2 Higher

OUTSIDE MARKET OPENING CALLS:

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

MILK:

Traders seem uncertain whether there will be further upside potential for milk prices near term. Prices moved higher in anticipation of increasing demand and now may hold until demand proves itself. Even though milk production has been strong and the inventory of cheese and butter has been increasing, they continue to remain below a year ago. That indicates demand has kept up with the increasing milk supply. If cow number and milk production per cow continue to increase, we could see a counterseasonal move between supply and demand. That could limit the upside price potential. However, if demand improves seasonally, milk prices will see further strength. The Global Dairy Trade auction will take place Tuesday.

CHEESE:

The barrel cheese price has held steady and may limit the upside movement of block cheese. Buyers may not be as aggressive at the current price level as the market will need to prove itself to support further gains.

BUTTER:

The butter price is expected to trend higher, exceeding the previous high of last week. Market fundamentals are improving with lower inventory than a year ago and increased retail demand. Buyers are ready to pick up what is being offered in the spot market.