Tuesday Closing Dairy Market Update - Total Cheese Inventory Declines From the Previous Year

GENERAL OVERVIEW:

Both Class III and IV futures were mixed on Tuesday. Spot cheese prices were unchanged, keeping traders uncertain over further strength. Higher butter and nonfat dry milk prices did not trigger buying interest, as the market had the increases already factored in. The cold storage report showed the butter and total cheese inventory below February 2025.

MILK:

Milk futures showed little direction as traders adjusted their positions to remain in line with cash. The limited volatility did not provide much opportunity to scalp the market for a good profit if it were to develop. The overall market did not react negatively to the bearish milk production report, but it may limit the outlook for price potential as the year progresses. However, the February Cold Storage report shows that increased milk production is being absorbed by demand, limiting the increase in supplies. February dairy cattle slaughter decreased by 9,500 head from January, totaling 237,300 head. This is not surprising, as there were three fewer days in the month. However, slaughter was significantly higher than in February 2025, with an increase of 20,300 head. But even with this increase in slaughter cow numbers, there are 211,000 more in the nation's dairy herd than a year ago.

AVERAGE CLASS III PRICES:

3 Month:	$17.18
6 Month:	$17.79
9 Month:	$18.05
12 Month:	$17.96

CHEESE:

The February Cold Storage report was released on Tuesday. American cheese inventory decreased by 8.2 million pounds from January. This is 3% below February 2025. Swiss cheese increased by 938,000 pounds, totaling 24.5 million pounds, up 2% from a year ago. Other cheese inventory increased 12.2 million pounds, totaling 576.0 million pounds. This was 1% above a year ago. Total cheese inventory increased 4.7 million pounds, totaling 1.387 billion pounds. This was 1% below February 2025.

BUTTER:

Butter inventory increased by 27.0 million pounds, totaling 253.8 million pounds. This was 17% below February 2025. Despite increasing inventory, year-over-year stocks did not increase, as the January inventory was 17% below the previous year.

OUTSIDE MARKETS SUMMARY:

May corn closed up 3 cents per bushel at $4.6250, May soybeans closed down 8.50 cents at $11.5500, and May soybean meal closed down $4.20 per ton at $322.40. May Chicago wheat closed up 2.25 cents at $5.9000. June live cattle closed down $0.05 at $234.60. May crude oil is up $1.05 per barrel at $89.18. The Dow Jones Industrial Average is down 84 points at 46,124, with the NASDAQ down 185 points at 21,762.

Tuesday Midday Dairy Market Summary - Nonfat Dry Milk Moves to a 12-Year High

OUTSIDE MARKETS SUMMARY:

CORN:	3 Higher
SOYBEANS:	8 Lower
SOYBEAN MEAL:	$3.80 Lower
LIVE CATTLE:	$0.10 Lower
DOW JONES:	19 Points Higher
NASDAQ:	150 Points Lower
CRUDE OIL:	$3.80 Higher

MIDDAY MARKET UPDATE:

The block cheese price remained steady at $1.6550 with 10 loads traded. The price moved 2 cents higher at one point during spot trading and 0.50 cent lower as well. This raised caution in the traders' minds, moving them to be conservative. The barrel cheese price remained unchanged at $1.5725 with no loads traded. The dry whey price remained unchanged at 66.00 cents with no loads traded. Class III futures are 13 cents lower to 8 cents higher. The butter price increased by 4.00 cents to close at $1.8150 with 28 loads traded. The price moved to $1.8200 at one point during spot trading, but slipped under the volume of selling activity. Grade A nonfat dry milk increased 3.25 cents to close at $1.91 with three loads traded. This is the highest price since April 15, 2024. Class IV futures are mixed from 15 cents lower to 15 cents higher. Butter futures are 0.50 cent lower to 3.12 cents higher. Dry whey futures are 0.27-2.35 cents higher. Cheese futures are 0.10-3.00 cents lower. The February Cold Storage report will be released this afternoon and is expected to show an increase in inventory.

Tuesday Morning Dairy Market Update - Traders Look Ahead to Cold Storage Report

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	1 to 3 Higher

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 2 Higher
Soybean Futures:	3 to 5 Lower
Soybean Meal Futures:	Steady to 1 Higher
Wheat Futures:	Mixed

MILK:

There was very limited activity overnight in milk futures. Traders may take a wait-and-see attitude, needing further direction from the underlying cash before feeling confident about the price direction. The bearish implications of the milk production report were not evident on Monday, but may surface Tuesday if there is weakness in the spot market. It is uncertain how much the hot weather will impact milk production in the West and Southwest regions. The rest of the country will see increased evidence of the spring flush as cow comfort improves. USDA will release the February Cold Storage report Tuesday afternoon. The report is expected to show an increase in inventory, but the increase may be less than usual for the month.

CHEESE:

The weakness of the block cheese price on Monday may keep traders cautious Tuesday. Class III milk futures close higher despite the weakness, but another day of weakness might trigger significant selling. Increasing cheese production and continued strong milk output may limit the upside price potential.

BUTTER:

The butter price has yet to find solid support. Buyers have been able to purchase a substantial amount of butter on the spot market. This is satisfying current demand and allowing buyers to build inventory. However, inventory is lower than a year ago as the increase is less than usual. This indicates solid domestic and international demand.