Wednesday Closing Dairy Market Update - May Class IV Closes Above $21

GENERAL OVERVIEW:

Milk futures posted a very strong day on Wednesday. Traders moved Class III futures higher in overnight trade in reaction to the Cold Storage report. That strength continued throughout the day despite the weakness of the block cheese price. Class IV futures were supported.

MILK:

The strength in Class III futures moved the June and later contracts to new highs. The gains on Wednesday were more from the optimism garnered from the February Cold Storage report, showing American and total cheese inventory below a year ago, and not what the actual spot market did. What we can see is that the market is absorbing increased milk production due to strong demand. The market appears to have solid support, and any weakness of the underlying cash may be short-lived. Class III futures are not far from reaching above $19 in later contracts. Class IV futures showed the May and June contracts moving above $21, but could not hold the full gains, with only May closing above $21.

AVERAGE CLASS III PRICES:

3 Month:	$17.33
6 Month:	$18.00
9 Month:	$18.26
12 Month:	$18.13

CHEESE:

Interestingly, the regions report that cheese production is strong and increasing, yet inventory is below a year ago. Spot milk is plentiful due to some plants diverting milk due to maintenance downtime. This is being scheduled ahead of the spring flush that is beginning to take place. After being stronger last week, spot milk prices are as much as $6 under class. Domestic demand is strengthening through retail outlets. International demand remains strong.

BUTTER:

Cream remains plentiful but is less available to butter manufacturers than it has been. Ice cream production is increased along with other Class II products. There is no concern over a shortage despite February inventory being 17% below a year ago. Trading activity has been strong this week in the spot market, with 87 loads already traded during the first three days.

OUTSIDE MARKETS SUMMARY:

May corn closed up 4.75 cents per bushel at $4.6725, May soybeans closed up 16.75 cents at $11.7175, and May soybean meal closed down $2.60 per ton at $319.80. May Chicago wheat closed up 7.75 cents at $5.9775. June live cattle closed down $0.75 at $233.85. May crude oil is down $0.98 per barrel at $91.37. The Dow Jones Industrial Average is up 305 points at 46,429, with the NASDAQ up 168 points at 21,930.

Wednesday Midday Dairy Market Summary - Nonfat Dry Milk Showed Further Strength

OUTSIDE MARKETS SUMMARY:

CORN:	5 Higher
SOYBEANS:	17 Higher
SOYBEAN MEAL:	$1.90 Lower
LIVE CATTLE:	$0.92 Lower
DOW JONES:	352 Points Higher
NASDAQ:	209 Points Higher
CRUDE OIL:	$1.94 Lower

MIDDAY MARKET UPDATE:

The block cheese price declined 1.50 cents to close at $1.6400 with four loads traded. The barrel cheese price remained unchanged at $1.5725 with no loads traded. The dry whey price gained 2.00 cents, closing at 68.00 cents with no loads traded. Class III futures are 7 cents lower to 45 cents higher. The butter price increased 0.25 cent to close at $1.8175 with 45 loads traded. The price initially increased to $1.8350, but the volume of loads offered put some pressure on the market. There were 18 unfilled bids and seven uncovered offers remaining at the close. Grade A nonfat dry milk increased 1.25 cents to close at $1.9225 with 11 loads traded. Buyers continue to remain aggressive. This is the highest price since April 1, 2014. Class IV futures are 25-50 cents higher. Butter futures are 3.50-7.30 cents higher. Dry whey futures are 1.70-2.07 cents higher. Cheese futures are 0.30 cent lower to 3.30 cents higher.

Wednesday Morning Dairy Market Update - Overnight Futures Indicate Higher Prices

OPENING CALLS:

Class III Milk Futures:	10 to 25 Higher
Class IV Milk Futures:	5 to 10 Higher
Butter Futures:	2 to 3 Higher

OUTSIDE MARKET OPENING CALLS:

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

MILK:

Class III milk futures post double-digit gains in overnight trading. This strength stems from the February Cold storage report, which showed cheese inventory increasing, but below a year ago. It is unusual for cheese stocks to increase in February. Demand is historically slower in the first half of the year. However, that does not appear to be the case. Strong milk production is being absorbed, and this report supports that. Whether this is sufficient to generate buying interest in the spot market and milk prices to increase remains to be seen. The spring flush period will increase milk availability, but it is expected to be absorbed without difficulty.

CHEESE:

American cheese inventory in February was 3% below that of February 2025. That is a bullish scenario, as strong cheese production was absorbed. Inventory usually increases during this time of year. Total cheese inventory was down 1% from a year ago. This should maintain support under the spot cheese market with higher prices warranted.

BUTTER:

Butter futures posted trade in the overnight session, which is unusual. Trade only took place in the May contract, but the price was up 3.47 cents. Bids placed overnight were higher than the close, indicating a similar reaction as the Class III futures. Cold storage showed inventory 17% below February 2025 and paints a bullish scenario.