GENERAL OVERVIEW:
Milk futures showed weakness due to traders' disappointment that spot prices did not increase as much as anticipated. This may be temporary, or it could indicate that cheese prices may have a price threshold. The April Federal Order prices will be released on Wednesday.
MILK:
Milk futures showed weakness, with most contracts posting double-digit losses. Underlying cash prices did not post weakness, with cheese prices steady and butter, nonfat dry milk and dry whey prices showing minor gains. Traders needed to see greater gains, and without those gains, they decided to bank some profits in case weakness surfaced. Increasing milk production due to the spring flush season, and output remaining significantly higher than a year ago, may limit the upside price potential. Even with the decline in futures today, prices have retained a good portion of the gains seen recently. The April Federal Order class prices will be released on Wednesday. The trade anticipates a Class III price of $16.85 and a Class IV price of $20.20.
AVERAGE CLASS III PRICES:
| 3 Month: | $18.19 |
| 6 Month: | $18.68 |
| 9 Month: | $18.56 |
| 12 Month: | $18.36 |
CHEESE:
The block cheese price is near the high it established earlier in the month. This may cap the price potential as buyers may not want to be active and aggressive buyers at the high. There is a plentiful milk supply available for cheese production. This eliminates the concern over supplies tightening anytime soon. Most manufacturers are operating on full schedules with limited purchasing of milk from the spot market.
BUTTER:
The spot butter price increased slightly, but it took some time for traders to react in the futures market. Early losses were finally eliminated, as traders decided to cover some short positions. The minor strength in butter does not indicate support has been established, as the pattern has been that an increase in the spot price has been short-lived and resulted in lower prices. This will keep traders cautious unless proven otherwise.
OUTSIDE MARKETS SUMMARY:
July corn closed up 6.25 cents per bushel at $4.7550, July soybeans closed down 2.75 cents at $11.8925, and July soybean meal closed down $.40 per ton at $327.40. July Chicago wheat closed up 28.00 cents at $6.5775. June live cattle closed up $4.55 at $253.50. June crude oil is up $3.56 per barrel at $99.93. The Dow Jones Industrial Average is down 26 points at 49,142, with the NASDAQ down 223 points at 24,664.

