Wednesday Midday Dairy Market Summary - Cheese Drops Back

Block cheese price declined 3 cents closing at $1.6025 with 10 loads traded. Barrel cheese price slipped 0.25 cent ending at $1.6250 with 12 loads traded. Barrels traded 0.25 cent higher before succumbing to selling pressure. Blocks bounced back 0.25 cents from the low before the market closed. Loads continue to be offered on the spot market as sellers want to move supply. This does not indicate a tightening market. Sellers do not want to hold out for higher prices as current fundamentals do not suggest that will take place anytime soon. Block price is the lowest it has been since Feb. 24. Butter price was able to creep higher by 0.25 cent closing at $1.8550 with one load traded. Grade A nonfat dry milk price declined a penny ending at $1.3025 with 6 loads traded. Dry whey price gained 0.50 cent with 1 load traded. Class III futures are20 cents lower to 5 cents higher. Class IV futures have not yet traded. Butter futures are 0.30 cent lower to 1.02 cents higher. Dry whey futures are 0.25 cent lower to 1.15 cents higher.

Wednesday Morning Dairy Market Update - Further Weakness Anticipated

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	4 to 10 Higher
Butter Futures:	Steady to 1 Higher

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	2 to 4 Lower
Soybean Futures:	7 to 12 Lower
Soybean Meal Futures:	Mixed
Wheat Futures:	8 to 12 Lower

MILK:

Closer Class III milk futures have fallen about a $1.00 over the past week. Once the corn market topped, it impacted the market negatively. It is interesting to see how strongly correlated the markets were even though these markets do not move in tandem on that quickly of a basis. This has truly been driven by perception rather than reality. The change of feed prices in relation to milk prices generally has a period of lag time. Indications were that high grain price were not going to impact milk prices for a period of time due to the strong interest in purchasing cows and replacement heifers at auctions. Cow numbers are expected to remain high rather than decline as many had expected. Class IV milk is showing strength as butter and powder prices remain rather strong. This is moving the Class III and Class IV prices closer together.

CHEESE:

Business is increasing in the spot market, but unfortunately, buyers are waiting for lower prices. Sellers have been aggressively moving product at lower prices in order to limit inventory build. As long as cheese continues to be offered aggressively on the spot market, buyers will hold back waiting to see how low they will go.

BUTTER:

Butter has good support under price. Buyers and sellers do business as they need to, which is keeping the market balanced and price choppy. Demand has been good both domestically and internationally. This is not expected to change much for a period of time. The inventory report on Monday will indicate the level of demand in April.

Tuesday Closing Dairy Market Update - Global Dairy Trade Auction Slips 0.2%

MILK

Class III futures closed mostly lower except for front-month May and then the November and December contracts. The June contract has fallen $1.17 over the past three days. It may have a difficult time recovering from this due to the weakness of cheese. The Global Dairy Trade auction took place Tuesday with the trade-weighted average slipping 0.2%, making it the third consecutive event with a slight decline. Anhydrous milk fat declined 0.1% to $5,730 per metric ton or $2.60 per pound. Butter declined 2.2% to $4,929 per metric ton or $2.24 per pound. Cheddar cheese gained 1.0% to $4,321 per metric ton or $1.96 per pound. Lactose gained 1.6% to $1,251 per metric ton or $0.57 per pound. Skim milk powder gained 0.7% to $3,447 per metric ton or $1.59 per pound. Whole milk powder declined 0.2% to $4,123 per metric ton or $1.87 per pound.

AVERAGE CLASS III PRICES

3 Month:	$18.83
6 Month:	$19.03
9 Month:	$18.84
12 Month:	$18.60

CHEESE

The weakness of cheese over the past few days has been a surprise. Buyers picked up supply but let the sellers offer lower prices before they purchased them. Sellers needed to move product and wanted to do it even at lower prices. This could indicate supplies are building and/or demand is slowing. Cheese has now moved quite a bit below butter, which is bringing Class IV milk futures quite a bit closer to Class III prices.

BUTTER

The market has more support under it than cheese. This is somewhat surprising due to the larger inventory it has. However, with strong demand from the foodservice industry with more restrictions lifted and outdoor dining increasing as the weather warms, demand will likely increase further. The market is comfortable with greater inventory levels as a cushion against a possible tight market sometime in the future. After all, butter can be frozen and then thawed out and used later when the need arises.

OUTSIDE MARKETS SUMMARY

July corn gained 5.75 cents, closing at $6.5825. July soybeans fell 13.25 cents, closing at $15.7425, with July soybean meal down $4.10 per ton, closing at $410.80. July wheat declined 1.75 cents, closing at $6.98. June live cattle jumped $1.40, closing at $116.75. June crude oil fell $0.78, ending at $65.49 per barrel. The Dow fell 267 points, closing at 34,061, while the NASDAQ fell 75 points, closing at 13,304.