Tuesday Closing Dairy Market Update - Class IV Futures Post Substantial Gains

GENERAL OVERVIEW:

Class III futures were mixed, but mostly higher. Class IV futures showed substantial gains due to the continued strength of nonfat dry milk. USDA will release the March Milk Production report on Wednesday.

MILK:

Class III milk futures were moderately higher, with the May and June contracts showing the most gains. A few contracts showed minor losses, but the gain in the block cheese price provided support. Class IV futures showed strong gains with June moving above $22.00 and July over $21.00 during the day. The continued strength in nonfat dry milk is providing substantial support to futures. There will be a point at which demand will slow, and the nonfat dry milk prices will reach a threshold, but it is uncertain as to what level that will be. USDA will release the March Milk Production report on Wednesday. I estimate milk output to be up 2.7% from March 2025, with cow numbers up 5,000 head from February.

AVERAGE CLASS III PRICES:

3 Month:	$17.35
6 Month:	$18.05
9 Month:	$18.23
12 Month:	$18.08

CHEESE:

Even though the block cheese price provided support to the market, futures are moving no better than sideways. Increasing milk production is providing sufficient milk for demand. Cheese output is heavy, but plants have the capacity to handle the extra milk. This important aspect is whether demand will continue to absorb the extra cheese being produced. The March Cold Storage report will be released on Friday, indicating whether demand is keeping up with supply.

BUTTER:

The butter price remains in a downtrend, with price increases being followed by a lower price. Butter inventory is below a year ago, but the market is focused on the continued supply being offered to the market. There have already been 58 loads of butter traded on the spot market this week.

OUTSIDE MARKETS SUMMARY:

May corn closed up 1.75 cents per bushel at $4.5375, May soybeans closed up 8.75 cents at $11.7450, and July soybean meal closed steady at $321.20. July Chicago wheat closed up 6.75 cents at $6.1275. June live cattle closed down $2.53 at $243.55. June crude oil is up $2.93 per barrel at $90.35. The Dow Jones Industrial Average is down 293 points at 49,149, with the NASDAQ down 144 points at 24,260.

Tuesday Midday Dairy Market Summary - Nonfat Dry Milk Pushes Higher

OUTSIDE MARKETS SUMMARY:

CORN:	2 Higher
SOYBEANS:	9 Higher
SOYBEAN MEAL:	$0.40 Higher
LIVE CATTLE:	$1.12 Lower
DOW JONES:	133 Points Lower
NASDAQ:	82 Points Lower
CRUDE OIL:	$2.52 Higher

MIDDAY MARKET UPDATE:

The block cheese price increased 1.50 cents to close at $1.60 with 17 loads traded. The barrel cheese price remained unchanged at $1.5750 with no loads traded. The dry whey price remained unchanged at 70.00 cents with no loads traded. Class III futures are 14 cents lower to 23 cents higher. The butter price decreased 1.50 cents, closing at $1.72 with nine loads traded. Butter is having a difficult time finding consistent buyer support. Grade A nonfat dry milk increased 1.50 cents to close at 2.2150 with no loads traded. Buyers continue to look for product and need to bid up to obtain it. There were four unfilled bids and one uncovered offer at the close of spot trading. Sellers seem to have a limited supply and want higher prices to let it go. Class IV futures are 13 to 34 cents higher. Butter futures are 0.02 to 5.65 cents lower. Dry whey futures have not yet been traded. Cheese futures are 0.10 cent lower to 2.50 cents higher.

Tuesday Morning Dairy Market Update - Markets to Remain Choppy

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	Steady to 1 Higher

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	Steady to 1 Lower
Soybean Futures:	4 to 6 Higher
Soybean Meal Futures:	Steady to 1 Higher
Wheat Futures:	Mixed

MILK:

The spread between Class III and Class IV futures continues to widen. Most of the strength in Class IV futures has been the result of nonfat dry milk. The rebound of butter on Monday added further support to the market, even though the nonfat dry milk price remained unchanged. Both cheese and butter production remain strong, resulting in limited upside potential for prices. Milk receipts continue to increase at the plant level in much of the nation as the spring flush continues. Manufacturers are moving supplies to the spot market rather than building inventory. The March Milk Production report will be released Wednesday and is expected to show higher milk production and cow numbers.

CHEESE:

Cheese prices may have difficulty showing much strength over the next few months. Increased milk production will keep cheese production strong and spot milk supplies readily available at a discount to class. Demand may be sufficient to keep cheese inventory from growing, but it may not be sufficient to increase prices.

BUTTER:

The bounce in the spot butter price on Monday did not change the direction of the market. The price remains in a downtrend and is unable to find solid support. Butter inventory is below a year ago, but manufacturers intend to move supplies to the market rather than build inventory.