Tuesday Morning Dairy Market Update - Traders Wait for Further Price Direction

Opening Calls:

Class III Milk Futures:	Steady to 5 Lower
Class IV Milk Futures:	Mixed
Butter Futures:	Steady to 1 Higher

Outside Market Opening Calls:

Corn Futures:	1 to 2 Lower
Soybean Futures:	2 to 4 Higher
Soybean Meal Futures:	Mixed
Wheat Futures:	3 to 7 Higher

Milk:

May through November Class III futures are solidly above $18.00, but that could change quickly if there is any weakness of cheese. Futures were able to close higher Monday despite steady cheese prices. More stimulus money moving to households is anticipated to keep demand strong. More money moving to government food programs is expected to do the same. Milk production is increasing and that may be sufficient to supply the extra demand as a result of the stimulus. However, increasing demand from the food service industry may be able to sufficient to move prices higher as they rebuild some of their inventory of supply. Milk futures indicate stronger prices ahead but will need to be supported by underlying cash. USDA will release the World Agricultural Supply and Demand report Tuesday. The report is expected to show the estimate for higher milk production than the February report. It is also expected to show an increase of milk prices and dairy product prices.

Cheese:

It is likely cheese prices took a breather Monday as buyers and sellers assessed the market. Buyers have been more aggressive as demand for fresh cheese has increased for both government food programs as well as the food service industry as restaurants open for more business. Price is moving in an uptrend but may have a limit to price potential.

Butter:

Early weakness of the spot market Monday was quickly reversed as buyers remained aggressive. Butter exports have increased with the January report showing butter exports increasing 80.5% over January 2020 and also above January 2019. Butter production is active with sufficient supply available for demand, yet buyers are aggressive making sure they purchase as a hedge against potential higher prices.