Wednesday Morning Dairy Market Update - Negative Attitude Remains

OPENING CALLS:

Class III Milk Futures:	4 to 8 Lower
Class IV Milk Futures:	Mixed
Butter Futures:	1 to 2 Lower

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	3 to 5 Higher
Soybean Futures:	8 to 10 Higher
Soybean Meal Futures:	$1 to $2 Lower
Wheat Futures:	3 to 4 Higher

MILK:

The substantial decline in Class III futures Tuesday moved the April contract limit-down. Follow-through weakness continued in overnight trading. The significant weakness in the block cheese price may cause buyers to pull back further as they wait to see whether the sellers remain aggressive. The action on Tuesday is further evidence the upside price potential may be limited. The hope from the government announcement a few weeks ago indicating they would purchase dairy products for food banks has had little impact on the market. Milk production is expected to remain strong, with the USDA estimating output this year reaching 234.7 billion pounds.

CHEESE:

The weakness of the block cheese price on Tuesday quickly turned the market negative. The hope of continued support from the recent price increases was quickly eliminated. Seasonally increasing milk production is moving milk to the cheese vat. Inventory may build more rapidly than usual through the first half of the year.

BUTTER:

The large decline in the butter price may cause buyers to be more aggressive in the spot market as they take advantage of the lower price. However, buyers may wait to see whether sellers need to move more product and will offer lower prices to move supplies.

Tuesday Closing Dairy Market Update - USDA Raises Milk Production

GENERAL OVERVIEW:

Milk futures were hit hard today, with Class III futures falling more than Class IV futures. The butter price fell more than block cheese, but the increase in nonfat dry milk offset some of the weakness. USDA increased its estimate for milk output and milk prices this year.

MILK:

Milk futures were under pressure today, with Class III showing most of the pressure. The decline of the block cheese price triggered the selling, pushing the April contract limit down to the lowest level since February 17^th. This has eliminated the bullishness that has recently developed as the block cheese price has been slowly improving. Milk production has been significantly higher than a year earlier for quite some time, and higher milk output is expected to continue through this year.

USDA raised its estimate for milk production on the World Agricultural Supply and Demand Estimates report released today. They estimate milk output at 234.7 billion pounds, up 200 million pounds from the February estimate. If realized, it would be an increase of 3.2 billion pounds from 2025. The estimate for the Class III average price remained unchanged at $16.65. This would be $1.36 below 2025. The estimate for the Class IV price was raised by $1.45 from the February estimate, but this would be $0.23 below a year ago. The All-milk price was raised to $19.70, up $0.75 from the February estimate.

AVERAGE CLASS III PRICES:

3 Month:	$16.45
6 Month:	$17.10
9 Month:	$17.51
12 Month:	$17.50

CHEESE:

The block cheese price fell similarly to today on Feb. 26 and then recovered quickly. The hope is that buyers will be aggressive buyers on the decline today, resulting in a price rebound. The USDA raised its estimate for the average cheese price to $1.6150, up a penny from the February estimate, but $0.17 below 2025. Unfortunately, the dry whey price was reduced by 3.00 cents to an average of 66.00 cents per pound. This is 6.00 cents higher than last year.

BUTTER:

The last time we saw a one-day decline in the butter price of this magnitude was on May 28, 2024. Buyers did not need to bid the market higher as they have been purchasing quite a bit of supply over the past number of weeks. They remained interested in buying, but at lower prices. The USDA raised its estimated butter price to $1.87. up $0.19 per pound from their February estimate. This would be $0.35 lower than 2025. The nonfat dry milk price was raised by $0.0750 to $1.39 per pound. This would be $0.16 above last year.

OUTSIDE MARKETS SUMMARY:

May corn closed down 1.50 cents per bushel at $4.5225, May soybeans closed up 5.50 cents at $12.0175, and May soybean meal closed up $1.00 per ton at $314.50. May Chicago wheat closed down 12.25 cents at $5.9100. April live cattle closed up $2.23 at $232.38. April crude oil is down $7.91 per barrel at $86.86. The Dow Jones Industrial Average is down 34 points at 47,707, with the NASDAQ is up one point at 22,697.

Tuesday Midday Dairy Market Summary - Milk Futures Plummet

OUTSIDE MARKETS SUMMARY:

CORN:	4 Lower
SOYBEANS:	Unchanged
SOYBEAN MEAL:	$0.90 Higher
LIVE CATTLE:	$2.02 Higher
DOW JONES:	357 Points Higher
NASDAQ:	145 Points Higher
CRUDE OIL:	$14.40 Lower

MIDDAY MARKET UPDATE:

The block cheese price fell 8.00 cents, closing at $1.55 with only one load traded and one offer remaining at the close of spot trading with no unfilled bids. This does not bode well for the market. The barrel cheese price remained unchanged at $1.57 with one load traded. The dry whey price remained unchanged at 64.00 cents with no loads traded. The weakness of block cheese and butter sent Class III futures limit down in the April contract, with substantial pressure on other contracts. Currently, Class III futures are 10-72 cents lower. The butter price fell 12.25 cents, closing at $1.8950 with 13 loads traded. There were nine unfilled bids and four uncovered offers remaining at the close. Grade A nonfat dry milk gained 2.75 cents to close at $1.7075 with three loads traded. Class IV futures are 5-37 cents lower. Butter futures are the daily 7.50 cents limit down in all traded contracts, with only the March contract down 5.62 cents. There is a pool of traders that want to sell but are unable to due to contracts being limit down. Dry whey futures are 0.15 cent lower to 1.50 cents higher. Cheese futures are 1.50-6.50 cents lower. USDA raised its estimate for milk production by 200 million pounds to 234.7 billion pounds.