DA440 
DA                                                         
MD DA440 BUTTER - WEST                           

MADISON, WI.  July 2, 2008 (REPORT 27)

WEST BUTTER	

Since June 9, butter prices at the CME Group cash market 
have either held steady or increased.  This is a period of 
17 trading sessions.  Prices have gained 8 1/4 cents and 
have not been this high since June 2007.  The price at 
midweek is $1.5525.  Some contacts are expressing concern 
that prices are getting too high to put together additional 
export deals.  One exception might be the current Japanese 
butter tender.  They are looking for very current 
production and a very short delivery period.  The U.S. may 
be the most likely source for this butter.  Most current 
deals run out at the end of July.  Butter production is 
heavy seasonally, but it is slowing as less cream is 
available in the market.  Demand from ice cream and other 
soft product manufacturers is very strong.  Multiples are 
being bid up at the same time that the base price is also 
increasing.  Many churns have decided that they are not 
able to compete for cream in this market.  Butter continues 
to be pulled out of storage programs and tempered for 
current needs.  Domestic butter interest remains good.  The 
weekly CME inventory report for week number 27 stands at 
110.8 million pounds, a 4.7 million pound decline from the 
previous week.  This compares to 146.4 million pounds for 
the comparable week last year.  Stocks probably peaked in 
week number 21 this year while they peaked in week number 
30 last year.  Stocks started to decline earlier than is 
the norm this year and the rate of decline is much faster 
than has been usual in recent years.  Prices for bulk 
butter range from 5 cents over the market to 4 cents under 
the market, based on the CME with various time frames and 
averages. 

300c
Don Nelson
608.250.3206