MILK
August through December Class III contracts regained the losses of last week, establishing new contract highs Tuesday. Closer contracts still have their work cut out for them to move back up to where prices were early last week. Increasing grain prices seem to be providing some support as buyers of cheese are looking ahead to the possibility of tightening supplies if dairy farmers increase their desire to cull more heavily, reducing the number of cattle that need to be fed. The Global Dairy Trade auction trade-weighted average declined 0.1% on Tuesday's event. There were 157 participating bidders with 25,040 metric tons sold. Anhydrous milk fat price declined 3.3% to $6,003 metric tons or $2.72 per pound. Butter declined 0.6% to $5,736 per metric ton or $2.60 per pound. Cheddar cheese price increased 1.2% to $4,436 per metric ton or $2.01 per pound. Lactose declined 3.4% to $1,260 per metric ton or $0.57 per pound. Skim milk powder was unchanged at $3,365 per metric ton or $1.53 per pound. Whole milk powder increased 0.4% to $4,097 per metric ton or $1.86 per pound. Buttermilk powder was not offered on this event.
Average Class III Prices
| 3 Month: | $18.77 |
| 6 Month: | $19.01 |
| 9 Month: | $18.89 |
| 12 Month: | $18.64 |
CHEESE
The rebound of cheese prices has been quick as buyers stepped into the market to take advantage of the drop. It seems that much of the buying interest might be tied to the fear of lower milk supply due to higher feed prices. A lot can happen before the crop is in the bin, but the current perception is alive and well. That has also been a focus in the cattle markets over the past week. USDA will release the March Milk Production report on Wednesday, which will indicate strong milk output that may not go away for a while.
BUTTER
What is up -- or should I say "down" -- with butter? The decline Wednesday was completely unexpected. It could be an indication that the foodservice industry pipeline may be filled with demand settling to maintain the current level. The surge to meet the rising demand may be over. The next indication will be whether retail demand slows due to increased restaurant demand. It is unclear if inventory is growing along with strong demand. We will see this on the cold storage report on Thursday.
OUTSIDE MARKETS SUMMARY
May corn jumped 14.50 cents, closing at $6.0650. May soybeans jumped 22.25 cents, closing at $14.72, with May soybean meal up $2.90 per ton, closing at $410.40. May wheat gained 7.50 cents, ending at $6.5975. April live cattle gained $0.22, closing at $120.57. June crude oil fell $0.94, closing at $62.44 per barrel. The Dow declined 256 points, closing at 33,821, while the NASDAQ fell 129 points.
