MILK
Milk futures were able to close higher, regaining some of the losses of Friday. Traders were not very aggressive as overall trading activity was rather light. Traders remain cautiously optimistic over higher prices as time moves forward. A few contracts during the summer and early fall are not far from reaching $18. This will keep milk production strong, as farmers desire to push milk production and take advantage of good milk prices. There remains concern over the possibilities of negative producer price differentials, but a rising butter price will minimize or eliminate that. The Global Dairy Trade auction trade-weighted average price increased 3.0% on Tuesday's event, making it the seventh consecutive auction posting a gain. Anhydrous milk fat increased 1.1% to $5,527 per metric ton or $2.51 per pound. Butter price increased 2.0% to $5,129 per metric ton or $2.33 per pound. Cheddar cheese increased 2.4% to $4,268 per metric ton or $1.94 per pound. Lactose gained 0.4% to $1,232 per metric ton or $0.56 per pound. Skim milk powder gained 0.3% to $3,207 per metric ton or $1.45 per pound. Whole milk powder price increased 4.3% to $3,615 per metric ton or $1.64 per pound. Buttermilk powder was not offered at this event.
AVERAGE CLASS III PRICES
| 3 Month: | $16.53 |
| 6 Month: | $17.09 |
| 9 Month: | $17.33 |
| 12 Month: | $17.32 |
CHEESE
There was very little interest in spot cheese Tuesday. Buyers either were inactive or have been able to get the product they need through regular channels rather than having to come to the spot market. Price might be developing a range in which buyers and sellers may be comfortable doing business. There is sufficient cheese around for demand from both retail and the food service industry. Restaurant business is slowly improving but will take some time to get back up to where it was. A lot of restaurants have closed and will not reopen unless under new ownership sometime in the future. The food service industry will not rebound as quickly as some would hope. Cheese inventory is expected to grow seasonally the first half of this year.
BUTTER
Butter is on a roll. Price increased 12.75 cents last week and then another 6 cents Tuesday. It is almost as if buyers are afraid that supply will tighten, and they are leapfrogging to purchase what is available before price increases further. This is positive to milk pricing as a higher butter price will bring Class III and IV prices closer together reducing or eliminating negative producer price differentials.
OUTSIDE MARKETS SUMMARY
March corn jumped 13.50 cents, closing at $5.5225. March soybeans jumped 12.75 cents, ending at $13.8475, with March soybean meal up $1.20 per ton, closing at $428.40. March wheat jumped 20.75 cents, closing at $6.5750. February live cattle fell $1.05, closing at $116.15. March crude oil gained $0.58, ending at $60.05 per barrel. The Dow gained 64 points, closing at 31,523, while the NASDAQ declined 48 points, ending at 14,048.
