MILK
Milk futures are being propelled higher by the strength of cheese prices. Historically, prices come under some pressure during this time of year as spring flush ramps up and milk receipts at the plant level increase significantly. Many plants have already been running at capacity, unable to take on any spot milk that is being offered to them. Some plants have a production restriction in place with their farmers, but that may not slow production as much as anticipated. Some farmers will take a lower price for a few months for the extra milk produced in order to maintain strong milk output once the restrictions are lifted. A positive aspect this year compared to last year is that butter price is increasing and remaining higher than cheese. This will help the blend price and should eliminate the negative Producer Price Differentials that were prevalent last year. More of the country is moving to spring flush with milk production per cow exceeding the levels of last year.
AVERAGE CLASS III PRICES
| 3 Month: | $19.28 |
| 6 Month: | $19.28 |
| 9 Month: | $19.01 |
| 12 Month: | $18.68 |
CHEESE
Both blocks and barrels have broken out of the sideways price ranges they had been in since mid-November. The extent of upward price movement that may unfold is unclear. It would seem that prices could reach a level of resistance due to slower exports over the past few months and the foodservice industry pipeline void being filled. However, buyers that had been waiting for lower prices during spring flush are now being drawn into the spot market over fear that price may continue higher, and they need to increase ownership of product. This is causing buyers to leapfrog over each other as they attempt to purchase what they can get their hands on.
BUTTER
Cream, for the most part, is available, keeping churns busy. However, there are some reports of tighter supplies in some areas. Ice cream production is increasing, which is taking some cream from the market. Right now, there is sufficient supply to go around, but cream supply will tighten as the spring and summer progress. Strong restaurant demand has required more butter than anticipated by this time of year, as the depleted foodservice industry pipeline needed to be replenished.
OUTSIDE MARKETS SUMMARY
May corn declined 8.25 cents, closing at $5.69. May soybeans fell 21 cents, closing at $13.82, with May soybean meal up $0.70 per ton, closing at $401.90. May wheat lost 10.75 cents, closing at $6.28. April live cattle declined $0.70, closing at $122.72. May crude oil gained $0.38, ending at $59.70 per barrel. The Dow slipped 55 points, closing at 33,745, while the NASDAQ declined 50 points, ending at 13,850.
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