MILK
Nearby Class III futures suffered some of the largest one-day losses seen in quite some time. We have seen quite a few substantial price swings, but total losses for a day were quite a bit less. For example, the May contract lost 50 cents. The last time there was a one-day decline of this magnitude for the contract was on Jan. 26. It is unclear if pressure will continue, but many times, weakness of cheese price will result in buyers pulling back as they wait to see how aggressive sellers will be at higher prices. The sharp gain of milk futures might bring hedgers out more aggressively as $19-$20 milk prices are very attractive. Milk production is increasing seasonally, which will keep the market sufficiently supplied. There is concern over grain production and feed prices this year, which will keep grain futures volatile. The large increase of corn futures Tuesday seemed to be tied to current dryness in corn-producing areas of Brazil. The current estimate is for a record-large corn crop in Brazil, but continued dry weather may trim production. Then, there will be the U.S growing season to move through and the impact of weather on production. That has been providing some underlying support to milk prices. The recent large futures increase over the past two weeks was initially triggered by the Prospective Plantings report at the end of March.
AVERAGE CLASS III PRICES
| 3 Month: | $18.88 |
| 6 Month: | $18.98 |
| 9 Month: | $18.80 |
| 12 Month: | $18.53 |
CHEESE
Buyers were not interested in purchasing block cheese Tuesday with no one standing in line even at lower prices. This would suggest further losses Wednesday as buyers may hold back for a period. Cheese demand is strong, but there is no indication of any tightness of supply. Buyers seemed to have been caught up in the exuberance of rising prices and kept buying cheese until they were satisfied.
BUTTER
Price has shown some recent weakness, but that certainly is no indication of a change in trend. Exports are strong and the foodservice industry active. More cream volumes are moving to ice cream production. However, there is sufficient supply to keep churns active. Buyers will remain active as orders need to be filled.
OUTSIDE MARKETS SUMMARY
May corn gained 11 cents, closing at $5.80. May soybeans gained 7.50 cents, ending at $13.8950, with May soybean meal down $6.90, closing at $395.00 per ton. May wheat gained 1.75 cents, closing at $6.2975. April live cattle declined $0.32, ending at $122.40. May crude oil increased $0.48, closing at $60.18 per barrel. The Dow declined 68 points, closing at 33,677, while the NASDAQ gained 146 points, ending at 13,996.
