DA440 
DA                                                         
MD DA440 BUTTER - WEST                           

MADISON, WI.  May 7, 2008 (REPORT 19)

WEST BUTTER

Cash butter prices at the CME continue their slow, steady 
weekly increases.  Prices have now increased 28 cents from 
the low point for 2008 in February.  At midweek, prices 
stand at $1.4575.  Contacts indicate that export activity 
remains good, but there is more concern related to both the 
higher prices and the strengthening dollar over the past 
few weeks versus the Euro.  Both factors may start to slow 
exports.  Domestic demand is still being called good for 
the spring season.  The Mother's Day and graduation seasons 
are both thought of as good times for additional butter 
sales.  Cream supplies remain plentiful with ice cream 
production lagging last year so that more cream is going 
into the churns.  According to ERS, Commercial 
Disappearance of butter for the period December 2007 to 
February 2008 on a daily average basis indicates an 
increase of 9.8%.  According to the NASS Dairy Products 
report, butter output for March totals 154.3 million 
pounds, up 11.5% or 15.9 million pounds from last year.  
This is the most butter ever produced in March since 
records started in 1936.  In second place was 1962 at 149.6 
million pounds.  Butter production in California for March 
was up 10.8% from last year while the Western region was up 
13.5%.  The West produced 48% of the U.S. butter in March.  
The weekly CME inventory report showed that stocks declined 
by 642,000 pounds from the previous week, standing at 124.5 
million pounds.  This compares to 129.2 million pounds for 
the same week last year.  In the last five weeks, stocks 
have shown a net increase of 5.5 million pounds this year 
compared to an increase of 18.0 million pounds last year 
for the same period and 24.7 million pounds in 2006.  The 
small increase this year should be noted in relation to the 
fact that March butter production was the highest on 
record.  Prices for bulk butter range from 3 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