MILK
Traders were not sure of price direction Monday and did not get too excited even when cash prices increased. A mixed close in Class III futures shows traders exercising caution as prices increased. June futures are trying to move back above $18 but will need further support from underlying cash to accomplish that goal. Futures have had a nice rebound the past few days, turning the outlook a bit more positive again. Milk supplies are readily available in the country with greater volumes expected over the next few months. The limiting factor may be production quotas that may be put on by processing facilities. However, some of those restrictions may not be adhered to very closely by producers. Limiting the production curve of a cow is never a good thing and affects that cow until her next lactation. If production restrictions are only put on for a few months, farmers may not slow down very much. Milk and cream demand for Class II products has been strong leading up to the holiday period. That demand has now been filled with buyers waiting to see just how strong product movement will be before reordering.
AVERAGE CLASS III PRICES
| 3 Month: | $16.95 |
| 6 Month: | $17.52 |
| 9 Month: | $17.81 |
| 12 Month: | $17.78 |
CHEESE
Cheese production remains strong with sufficient milk supply available for needs. Cheese demand has improved from the food service industry but remained somewhat steady for retail demand. Levels of demand varies from area to area and even plant to plant, depending on variety. Lower cheese prices increased international buyer interest. Now with price increasing again, there could be some slowing of export interest, depending on how much higher cheese prices will move.
BUTTER
Buyers continue to come to the spot market to purchase butter to fill orders or maybe to increase ownership of supply in case the market tightens significantly down the road. That is not likely, but buyers would rather be safe than sorry. Retail sales have been strong as stores have been featuring butter for the holiday season to bring consumers into the stores. Inventory is rather large, but increasing demand from the food service industry and a strong export market may limit the amount of inventory growth this year.
OUTSIDE MARKETS SUMMARY
May corn declined 5.75 cents, closing at $5.4675. May soybeans declined 7.50 cents, ending at $13.93, with May soybean meal down $5.90 per ton, closing at $398.10. May wheat gained 3.50 cents, closing at $6.1675. April live cattle gained $0.87, closing at $120.97. May crude oil gained $0.59, closing at $61.56 per barrel. The Dow gained 98 points, closing at 33,171, while the NASDAQ declined 79 points, closing at 13.060.
