Wednesday Morning Dairy Market Update - Higher Prices Expected For Milk Futures

OPENING CALLS:

Class III Milk Futures:	6 to 12 Higher
Class IV Milk Futures:	5 to 10 Higher
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

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

MILK:

It seems the recent trading pattern may develop again Wednesday. The pattern has been that milk futures will move in one direction or the other, despite the underlying cash prices not supporting the move. On Tuesday, spot prices were rather stable, but further pressure was put on milk futures as short-term traders have been able to extend the weakness for their benefit and may now cover those short positions at a greater profit. This has happened recently in both price weakness and strength. This type of market action does provide opportunities for hedgers to initiate better positions to protect prices due to the increase in volatility. Market fundamentals have remained stable and may remain that way for a longer period.

CHEESE:

Lower cheese prices are expected to find buying interest again. Supplies are readily available, but it makes sense to purchase at low prices to hedge against higher prices that may develop as the year progresses. Higher milk production may limit the upside potential as cheese production remains strong.

BUTTER:

The butter price may have greater upside potential than cheese, but the strength may be limited due to plentiful cream supplies from record butterfat content in milk. Export demand remains very strong and should help provide support to the maket.

Tuesday Closing Dairy Market Update - USDA Raises Milk Production and Prices

GENERAL OVERVIEW:

Milk futures closed mostly under pressure despite minimal movement in the underlying cash. The World Agricultural Supply and Demand Estimates report was released, showing limited changes in grains and increases in milk and dairy product prices.

MILK:

Class III milk futures were mixed, with contracts lower during the first half of the year and later contracts higher. Class IV futures suffered substantial losses despite mixed butter and nonfat dry milk spot prices. It appears milk futures will remain volatile despite limited movement in the underlying cash. USDA increased its estimate for milk output this year by 200 million pounds, totaling 234.5 billion pounds. If this comes to fruition, production will be 3.0 billion pounds higher than in 2025. The estimate for the average Class III price was raised by $0.30 to $16.65 per cwt. The Class IV estimate was raised to $15.70, up $1.25 from the previous month. The All-milk price was raised to $18.95, up $0.70 from the January report. Beginning stocks on a fat basis were raised by 400 million pounds, totaling 12.8 billion pounds. Exports increased by 500 million pounds, and more than offset the increase in inventory. Beginning stocks on a skim-solid basis were reduced by 200 million pounds, while exports were reduced by 100 million pounds.

AVERAGE CLASS III PRICES:

3 Month:	$16.07
6 Month:	$16.72
9 Month:	$17.13
12 Month:	$17.20

CHEESE:

The USDA raised its estimated average cheese price to $1.6050, up $0.02 from the January estimate. This would be a decrease of about $0.7850 per pound from last year. The dry whey price was raised to $0.6900 per pound, up $0.02 from the previous estimate. This would be an increase of about 9.50 cents from 2025.

BUTTER:

The USDA increased its estimate for the butter price this year by $0.08 per pound to an average of $1.68. This would be about $0.54 per pound lower than in 2025. The nonfat dry milk price estimate was raised by $0.11 per pound to $1.3150 and would be $0.08 higher than in 2025.

OUTSIDE MARKETS SUMMARY:

March corn closed steady at $4.2875, March soybeans closed up 11.75 cents at $11.2250, and March soybean meal closed up $3.00 per ton at $300.80. March Chicago wheat closed down .50 cent at $5.2825. April live cattle closed down $0.78 at $237.43. March crude oil is down $0.18 per barrel at $64.18. The Dow Jones Industrial Average is up 52 points at 50,188, with the NASDAQ down 136 points at 23,102.

Tuesday Midday Dairy Market Summary - Bounce in Butter Shows Little Impact

OUTSIDE MARKETS SUMMARY:

CORN:	Unchanged
SOYBEANS:	11 Higher
SOYBEAN MEAL:	$2.40 Higher
LIVE CATTLE:	$0.17 Higher
DOW JONES:	59 Points Higher
NASDAQ:	53 Points Lower
CRUDE OIL:	$0.34 Lower

MIDDAY MARKET UPDATE:

The block cheese price slipped 0.25 cent to close at $1.4425 with no loads traded. The barrel chees pricre remained unchanged at $1.4400 with no loads traded. The dry whey price declined a penny, closing at 72.00 cents with one load traded. Class III futures are mixed, ranging from 28 cents lower to 11 cents higher. The butter price increased 1.00 cents to close at $1.6350 with 19 loads traded. Grade A nonfat dry milk slipped 0.50 cent to close at $1.60 with no loads traded. Class IV futures are 26-81 cents lower despite the increase in butter. Pressure may be from the spot butter price slipping back from the higher price during spot trading. Butter futures are 3.27 cents lower to 1.30 cents higher. Dry whey futures are 0.30 cent lower to 1.35 cents higher. Cheese futures are 0.50 to 2.70 cents lower. USDA estimates milk production this year to total 234.5 billion pounds. This is 200 million pounds higher than the estimate a month earlier. If realized, it would be 3.0 billion pounds above 2025.