MILK
Class III milk futures were higher overnight and remained that way throughout the day. Underlying cash cheese prices remained steady, but the fact that prices did not dip lower continued to provide support. Mild weather is prevalent across much of the nation, increasing cow comfort. The West is seeing early spring flush levels of milk production. This may bring spring flush early this year and could extend the season of increasing milk output. There is some concern over weather this year, as some have been making comparisons to 2012 when there was more of a widespread drought. It is too early to tell whether the dryness in the West and Central Plains will move farther east as the year progresses. USDA will release the World Agricultural Supply and Demand report Tuesday, which will provide USDA's estimates for milk production, average milk prices and average product prices for the year. It is expected they will increase milk production from their last estimate of 227.4 billion pounds. They will likely increase their price estimates for milk as well as cheese, butter, nonfat dry milk and dry whey.
AVERAGE CLASS III PRICES
| 3 Month: | $17.46 |
| 6 Month: | $17.87 |
| 9 Month: | $18.02 |
| 12 Month: | $17.91 |
CHEESE
Although cheese prices have been improving and held steady Monday, there are reports cheese inventory is growing. However, with increased government purchasing for food programs, the growth of inventory might be kept in check. Supply should increase seasonally as more milk is available for cheese production. It is possible that increased availability of milk and higher cheese production will not overwhelm the market because of strong demand. The concern is whether plants will be able to handle all the milk that will be available during spring flush. Production is currently running higher than last year.
BUTTER
Butter production remains strong with plenty of cream available. Plants are trying to process the large supply of cream due to the difficulty of selling extra cream. Retail interest is increasing as consumers are looking ahead to the Passover/Easter holiday in less than a month. Food service demand is improving as they prepare for increasing demand for baked goods during the holiday. Export demand continues to improve.
OUTSIDE MARKETS SUMMARY
March corn gained 3 cents, closing at $5.65. March soybeans gained 3.50 cents, closing at $14.3775, with March soybean meal declining $1.70 per ton, closing at $418.30. March wheat fell 7.50 cents, ending at $6.4650. April live cattle gained $0.32, ending at $119.35. April crude oil fell $1.04, closing at $65.05 per barrel. The Dow gained 306 points, ending at 31,802, while the NASDAQ fell 311 points, closing at 12,609.
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