Markets:

General:

AM price moves: USD +0.019 @ 79.020, Euro -17 @ 1.3224, Crude -0.46 @ 104.09, Copper +0.0105 @ 3.7775, Gold -6.5 @ 1,654.0,  Dow futures -6 @ 13,154, S&P -1.80 @ 1,395.00, NZ Dollar -11 @ 0.8123, Yen +42 @ 1.2401, Canadian -6 @ 1.0151

· Bank of Japan expands stimulus

· European stocks advance as Italy sells bonds ($7.9b) but Italy’s borrowing costs jump

· S&P downgrades Spain to BBB+ with a negative outlook; Spanish bond yields jump as a result

· S&P affirms Ireland’s BBB+ rating with a negative outlook

· DOW Jones utilities hit a 5 ½ year high yesterday

· Today’s reports and the week ahead at a glimpse:

http://www.cmegroup.com/daily_bulletin/Section04_Agricultural_Soft_AltInvestment_Futures_2012081.pdf

4/26 Class III Futures:  Volume: 824 Open Interest (OI) Change: +154 Total OI: 29,820

4/26 Class III Options:  Est. Put Volume: 263 Total OI:  39,033  Est. Call Volume:  638 Total OI:  36,232

4/26 Other Dairy Futures Volume:   Butter: 84 Dry Whey: 64 NFDM: 44 Class IV: 5 Cheese: 172

4/26 Individual Class III Futures Prices, Change, Volume & Open Interest

April 12       $15.73         DOWN 1           Vol:   7            OI Change:            UNCH

May 12        $14.85          DOWN 13        Vol:   163       OI Change:               UP 32

June 12       $14.18          DOWN 11        Vol:   270        OI Change:              UP 49

July 12        $14.75           DOWN 7          Vol: 134          OI Change:              DOWN 1

May to July Class III Avg.        $14.59             Down $0.11/cwt.

May to July Class IV Avg.        $13.95 Down $0.50/cwt.

Dairy: Class III and Cheese

Spot Markets:

Thursday was a somewhat subdued trade for Class III as volume clocked in at just above 800 contracts on minor price declines with a significant open interest increase yet again. After opening slightly higher, futures began to lose steam on light news. The concerted effort by the industry to account for - and dissolve - the Mad Cow issue, continued to BSE chatter may have had a small role in tempering buy side interest. But it was more likely the continued two-sided trade in spot cheese – and new trading lows in the butter market - that ultimately prompted Class III futures to challenge the week’s trading lows on many contract months. And it was likely a firming dry whey futures market that held Class III selling to only marginal losses.

One main issue of trader concern Thursday was the divergent spot market. The block market finished up .25 to $1.5250 yesterday while barrels lost 2.75 cents to close at $1.42. Over the past few days the block price looks more and more vulnerable to weakness in the face of a widening spread with barrels. Moreover, fresh cheese supplies are reportedly ample and sellers have product to bring to market. Some anecdotal evidence exists to suggest a somewhat better American cheese demand picture over the past few weeks, but there is not a wall of worry to climb right now. There needs to be some worry for prices to climb.

Weekly slaughter numbers dropped below the 60,000 cow mark for the first time since the last week of January. While still culling at a higher clip that a year ago, it looks like Region Five (CA, AZ, NV, HI) showed the largest slowdown for the week. We think this is an aberration and that slaughter should continue to rise north of 60K and potentially over 70K over the next 30 to 60 days.

As for today, we expect a mixed trade early in Class III and Cheese futures. Class IV ought to trade mixed too to start after having taken the brunt of massive price losses yesterday on just five trades. Class IV finished between unchanged and .61 cents lower Thursday.

Overnight Class III traded 60 contracts from -6 to +4 while cash settled cheese traded 44 times slightly higher, all in May.

We look for milk and cheese to open mixed with a weaker bias.

NFDM, SMP, WMP:
Trading slowed but the price plunge did not for NFDM futures Thursday. Overall the CME still posted a respectable volume of 44 contracts trading hands as prices lost 1.50 to 3.25 cents from May to December on further weakness from the USDA. The Western Mostly price was 2.50 cents lower at $1.1875 this week.

We look for NFDM to open weak once again.

Butter:

Butter futures plummeted after the spot price crumbled Thursday losing 3 cents to finish at a new yearly low of $1.36. May to December butter futures fell between 2.50 and 5.00 cents lower – October finishing limit down. It has been suggested that the CWT export assistance program will have to up the ante to continue exports as our U.S. price falls. All in all, expect more butter to be pushed into the cooler and prices to trade the mid- to low $1.30’s into May.

Overnight saw prices as low as 1.25 in front and up slightly in October on 11 trades total.

We look for butter to open lower.

Dry Whey:

Overnight whey traded half a cent lower in May 11 times. 

We look for whey to open mostly mixed to lower.

Grains:

Corn lost footing Thursday - as the soy market the bullish beacon of the grain complex, which has been buying acres back from corn over the past week – to a reprieve from its latest rally. Those who grow soybeans have a big, blinking green light on making sales of new crop beans. Meanwhile, corn is testing its recent lows and and major support levels; it is a pivotal time.

Corn sales arrived at 645,600 tons, up noticeably from the previous week and 11 percent from the prior 4-week average. Soybeans too were strong with net sales of 926,200 tons, up from the previous week and the prior 4-week average. Wheat sales of 386,700 tons were up 6 percent from the previous week and 7 percent from the prior 4-week average.

We look for corn to open 4 to 5 higher, for beans to open 8 to 10 higher, for meal to open 3.3 to 3.8 higher and for wheat to open 1 to 3 higher.