Monday Midday Dairy Market Summary - Cheese Prices Slip

OUTSIDE MARKETS SUMMARY:

CORN:	10 Higher
SOYBEANS:	21 Higher
SOYBEAN MEAL:	$6.60 Higher
LIVE CATTLE:	$0.37 Higher
DOW JONES:	104 Points Lower
NASDAQ:	98 Points Higher
CRUDE OIL:	$0.73 Lower

MIDDAY MARKET UPDATE:

The block cheese price declined 2.25 cents, closing at $1.92 with five loads traded. The barrel cheese price declined by 1.50 cents, closing at $2.17 with one load traded. Traders anticipated cheese prices increasing with strong futures prices ahead of spot trading. That quickly reversed as weakness became evident. The June contract had a price swing from the high to the low of 92 cents. The dry whey price remained unchanged at 41.50 cents with no loads traded. Class III milk futures range from 34 cents lower to 28 cents higher. June is the lower price with March showing the highest price. The butter price gained 2.25 cents, closing at $3.0925 with four loads traded. The Grade A nonfat dry milk price declined 0.50 cent, closing at $1.16 with no load traded. Class IV futures are 23 cents lower to 9 cents higher. Butter futures are steady to 3.00 cents higher. Dry whey futures are unchanged to 0.75 cent lower. USDA will release the April Milk Production report Monday afternoon. I estimate milk production to be 1% below a year ago with cow numbers down 4,000 head from March.

Monday Morning Dairy Market Update - April Milk Production Report Released Monday

OPENING CALLS:

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

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	2 to 3 Higher
Soybean Futures:	2 to 4 Higher
Soybean Meal Futures:	Steady to $1 Higher
Wheat Futures:	14 to 17 Higher

MILK:

Traders stayed out of the market during the night, leaving limited activity with trading confined to the June and March contracts. It is very unusual to see trading that far out during overnight trade. There were wide bids and offers posted, leaving little opportunity for active trade. Traders will be cautious ahead of cash but may have an upward bias based on the recent trend. USDA will release the April Milk Production report Monday afternoon. I estimate milk production to be down 1% from a year ago with cow numbers down 4,000 head from March. Due to the milk production report, no Dairy Revenue Protection prices will be released Monday.

CHEESE:

Based on the spot trading activity Friday, the block cheese price may move to reduce the wide price gap it holds to barrels. Cheese buyers are concerned about supply as the year progresses and may continue purchasing to get ahead of further price increases.

BUTTER:

The butter price may continue to find support as buyers want to purchase for later demand and ahead of further price increases. Churning remains active with supply sufficient for demand, but buyers are looking ahead. Price is trending higher earlier than usual which has caused further concern for buyers.

Friday Closing Dairy Market Update - New Contact Highs in Milk Futures

MILK

Milk futures showed strong gains this week with July and later contracts making new contract highs. The gains have been quick and steep, which generally does not last long unless further support comes from positive fundamentals. Buyers perceive that milk supply will tighten and demand will improve as the year progresses. The strength may be premature resulting in a significant price correction once the buying frenzy is finished and the market comes in line with demand. Milk production has been lower than a year ago, but manufacturing plants have been running full schedules. More milk has been moving to plants as schools have closed and will close over the next few weeks. More spot milk is becoming available with prices ranging from $4.00 below to $0.50 above class.

AVERAGE CLASS III PRICES

3 Month:	$20.25
6 Month:	$20.07
9 Month:	$19.69
12 Month:	$19.38

CHEESE

For the week blocks declined 3.75 cents with 34 loads traded. Barrel cheese price jumped 21.25 cents with 10 loads traded. The dry whey price increased by 3 cents with 12 loads traded. The surprise this week was the increase in barrels as fundamentals do not suggest prices to be this high at this time. This changed milk prices and production outlook for the rest of the year. USDA already estimated milk output to increase by one billion pounds. Higher milk prices are generally a result of better milk prices. Inventory is not above a year ago which could result in a tighter supply if demand were to improve.

BUTTER

For the week, butter increased 8 cents moving within 0.50 cent of the previous high. There were 20 loads traded. The Grade A nonfat dry milk price gained 1.25 cents with 30 loads traded. Churns remain active due to the plentiful cream supply. The intent is to churn as much as possible utilizing the available cream. The supply will tighten as the production of ice cream and other Class III products increases.

OUTSIDE MARKETS SUMMARY

July corn closed down 4.50 cents per bushel at $4.5250, July soybeans closed up 11.75 cents at $12.2800 and July soybean meal closed up $1.10 per ton at $368.80. July Chicago wheat closed down 12.00 cents at $6.5125. June live cattle closed up $2.03 at $181.05. June crude oil is up $0.83 per barrel at $80.06. The Dow Jones Industrial Average is up 134 points at 40,004 with the NASDAQ down 12 points at 16,686.