Monday Closing Dairy Market Update - February Agricultural Prices Increase

GENERAL OVERVIEW:

Milk futures closed lower with more weakness seen in Class IV futures. The price swings in Class III futures were significant in the closer months as overnight trade was active. The February Agricultural Prices report was released and showed an increase in all prices used in the calculation of income over feed.

MILK:

Class III futures had quite the price swings in the closer months, beginning with substantially higher trade in the overnight session. The March contract had a range of $0.91. This volatility has never before happened in the nearby contract, with only two days of trading remaining. The April contract moved in a $0.70 range. The May contract moved in a $0.41 range. In the end, most contracts closed lower. Class IV futures were under pressure despite a steady butter price and an increase in nonfat dry milk. The February Agricultural Prices report showed an average corn price of $4.11 per bushel, up $0.01 from January but down $0.47 from February 2025. The Supreme/ premium hay price was $229.00, an increase of $3.00 per ton from January and down $14.00 per ton from February 2025. The All-milk price was $18.30 per cwt. This was an increase of $0.80 per cwt from January, but down $5.30 per cwt from February 2025. The average soybean meal price will be released on Tuesday by the FSA to provide the prices needed to calculate income over feed for the Dairy Margin Coverage program. Other prices to take note of are the alfalfa hay price for February, which was $152 per ton, an increase of $3.00 per ton from January, and was $2.00 per ton lower than a year ago. The average soybean meal price was $10.60 per bushel, up $0.30 from January and up $0.40 from February 2025.

AVERAGE CLASS III PRICES:

3 Month:	$17.02
6 Month:	$17.77
9 Month:	$18.10
12 Month:	$18.01

CHEESE:

The increase in the block cheese price had little influence on Class III futures. There is uncertainty about the upside price potential as milk output increases and cheese supplies remain sufficient for demand.

BUTTER:

Butter output is higher than a year ago, but inventory has not been able to reduce the deficit of a year ago. Strong demand is keeping inventory from building significantly. This will support the market, but increased production may limit the upside price potential.

OUTSIDE MARKETS SUMMARY:

May corn closed down 6.25 cents per bushel at $4.5575, May soybeans closed up .50 cent at $11.5975, and May soybean meal closed down $.40 per ton at $314.90. May Chicago wheat closed 2.00 cents at $6.0700. June live cattle closed up $1.43 at $240.20. May crude oil is up $3.24 per barrel at $102.88. The Dow Jones Industrial Average is up 50 points at 45,216, with the NASDAQ down 154 points at 20,795.

Monday Midday Dairy Market Summary - Milk Futures Fail After Significant Movement Overnight

OUTSIDE MARKETS SUMMARY:

CORN:	5 Lower
SOYBEANS:	5 Higher
SOYBEAN MEAL:	$0.50 Higher
LIVE CATTLE:	$0.82 Higher
DOW JONES:	101 Points Higher
NASDAQ:	132 Points Lower
CRUDE OIL:	$3.93 Higher

MIDDAY MARKET UPDATE:

The block cheese price increased 1.50 cents to close at $1.5975 with 10 loads traded. The barrel cheese price remained unchanged at $1.5650 with no loads traded. The dry whey price remained unchanged at 69.00 cents with no loads traded. Class III futures are 17 cents lower to 5 cents higher. The butter rice remained unchanged at $1.8250 with no loads traded. Grade A nonfat dry milk increased 0.75 cent to close at $1.9300 with two loads traded. Class IV futures are 12-21 cents lower with trading confined to the May, June and July contracts. Butter futures are steady to 4.00 cents lower. Dry whey futures are 0.22 cent lower to 1.02 cents higher. Cheese futures are 1.10 cents lower to 0.30 cent higher. USDA will release the February Agricultural Prices report this afternoon.

Monday Morning Dairy Market Update - Overnight Trading Activity Was Impressive

OPENING CALLS:

Class III Milk Futures:	5 to 10 Higher
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	MIxed
Soybean Futures:	6 to 9 Higher
Soybean Meal Futures:	$0.50 to $1 Lower
Wheat Futures:	Mixed

MILK:

It was an interesting overnight market for Class III futures. Both the March and April contracts were active, with March showing 185 trades and April showing 237 trades at the time of this writing. This level of activity is rarely seen during overnight trade. Something triggered aggressive buying as the current bids are significantly below the last trades. Someone paid the price when buying the April contract with a market order, as it rose as much as 63 cents at one point. The current offer is 31 cents higher than Friday's close. The opposite was seen in the March contract as the price fell as much as 91 cents this morning, as again an inexperienced trader entered market orders. It is surprising to see the heavy trading activity in the March contract as Tuesday is the last trading day with the March Federal Order prices announced on Wednesday. USDA will release the February Agricultural Prices report Monday, providing most of the prices used in calculating income over feed for the Dairy Margin Coverage program.

CHEESE:

Cheese prices may see further weakness as buyers might have reached a threshold. Cheese output is strong as milk receipts increase at the plant level, and spot milk is available at a discount.

BUTTER:

Butter futures showed trading overnight, which is unusual, but may become more common as increased volatility has dominated the market. Price swings have been substantial as traders react to underlying cash. Butter orders for the Easter season have been met with business being done as usual.