Tuesday Closing Dairy Market Update - Traders Show Disappointment

GENERAL OVERVIEW:

Class III futures closed mixed while Class IV futures closed lower in most contracts. Traders resigned to the fact that the market may not be ready to trend higher. Tuesday is the last day to trade July futures and options.

MILK:

The early anticipation of strength in the spot market did not come to fruition. Cheese and butter prices took a pause, leaving traders wondering whether prices will have sufficient strength to turn higher or whether sellers will become impatient and lower their offers. Discussions revolve around whether buyers will step up to the plate soon and purchase supplies to build inventory in preparation for upcoming demand or whether they will remain comfortable purchasing on an as-needed basis. Milk production continues to remain above a year ago. Time is running out for hot weather to have an impact on milk output. August can have plenty of hot days that could impact production, but two months of the summer are already behind us. We will see the full impact of the hot weather when the July Milk Production report is released later this month. Milk production and components have been impacted, but many producers indicate their cows are holding production well. The July Federal Order class prices will be released on Wednesday. The trade anticipated a Class III price of $15.63 and a Class IV price of $18.49.

AVERAGE CLASS III PRICES:

3 Month:	$17.27
6 Month:	$17.43
9 Month:	$17.47
12 Month:	$17.54

CHEESE:

Buyers generally turn more aggressive during this time of year as they look ahead to fall and holiday demand. Packagers and recutters step up more aggressively to procure the cheese they need to build inventory for packaging for gift boxes and holiday promotions. They generally will not wait until they need it. The unknown is whether they have already been purchasing and may not need to be as aggressive as the year progresses.

BUTTER:

Sellers were not interested in selling any butter on the spot market today. There were 58 uncovered offers placed during spot trading, but none of the offers were reduced to get any business done. With reduced cream supplies and churning activity, plants may not need to move inventory with any urgency.

OUTSIDE MARKETS SUMMARY:

December corn closed down 7.00 cents per bushel at $4.6550, November soybeans closed down 14.50 cents at $11.7775 and December soybean meal closed down $3.20 per ton at $318.40. September Chicago wheat closed down 12.50 cents at $6.3850. October live cattle closed up $1.18 at $227.90. September crude oil is down $5.17 per barrel at $75.17. The Dow Jones Industrial Average is up 907 points at 54,086, with the NASDAQ up 671 points at 26,585.

Tuesday Midday Dairy Market Summary - Steady Prices Provide Little Support

OUTSIDE MARKETS SUMMARY:

CORN:	6 Lower
SOYBEANS:	13 Lower
SOYBEAN MEAL:	$2.90 Lower
LIVE CATTLE:	$1.12 Higher
DOW JONES:	1032 Points Higher
NASDAQ:	674 Points Higher
CRUDE OIL:	$4.65 Lower

MIDDAY MARKET UPDATE:

Both the block and barrel cheese prices remained unchanged at $1.5600 and $1.5475 respectively. There were three loads traded of blocks and no loads of barrels. The dry whey price closed at 69.00 cents, down 0.25 cent with no loads traded. Class III milk futures are mixed, ranging from 21 cents lower to 2 cents higher. The butter price remained unchanged at $1.4850 with no loads traded. Manufacturers want to sell butter, but not aggressively. There were unfilled bids for 58 loads remaining at the close of spot trading. The Grade A nonfat dry milk price increased 4.50 cents, closing at $1.5700 with 10 loads traded. Class IV futures have only had trading activity in July and August at unchanged prices. Butter futures are 1.25 -- 4.30 cents higher. Dry whey futures have not yet traded. Cheese futures are 0.20 -- 1.70 cents lower. Nonfat dry milk futures are steady to 3.50 cents higher. July futures and options have ceased trading, with August taking over as the lead month. The July Federal Order class prices will be released today.

Tuesday Morning Dairy Market Update - Traders Show Overnight Optimism

OPENING CALLS:

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

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 2 Lower
Soybean Futures:	6 to 8 Lower
Soybean Meal Futures:	$2 to $4 Lower
Wheat Futures:	2 to 4 Lower

MILK:

There is ample milk supply to meet the needs of bottling and manufacturing. Milk output is lower due to higher temperatures, but higher cow numbers and higher per-cow production keep milk from being tight. Milk components have decreased. The decrease in butterfat content has tightened the cream supply. The demand for fluid milk from bottlers will increase as they prepare for the reopening of schools. This will reduce the amount available for the cheese vat and other dairy product production. However, this may not provide much support to the market unless demand improves significantly.

CHEESE:

The weakness in block cheese on Monday may indicate the market may remain choppy. Some feel that buying interest will increase as buyers prepare for expected fall and holiday demand. However, with sufficient supplies available, that buying may be delayed.

BUTTER:

Cream supplies have tightened, but it may not be sufficient to reduce the supply available for butter production. Butter inventories have been below a year ago, but buyers have not been concerned over it. Manufacturers continue to offer butter on the spot market.