MILK
One has to wonder just how long milk futures will continue to increase. The strength has been incredible since September, as there was fear over tightening milk supply. Cow numbers have declined, but milk production per cow has improved, making up for some of the short fall. However, culling has been higher than usual as high feed prices and the cost of most other things has increased cost of production significantly. It is unclear at what point this may change due to the uncertainty of feed prices and weather this coming growing season. Farms do not want to commit to adding more cows or expanding if other costs continue to rise. Yet, at the same time, there is uncertainty over the duration of higher prices and what impact that may have on demand. There has been some information that milk supply is tight in some areas with one co-op indicating they are short of milk to be able to supply their buyers. This same co-op implemented a quota recently, penalizing producers for producing more than their allotted quota. They are likely looking ahead to a surge in milk production at some point in the future and they want to have something in place and workable. Generally, the information is that there is sufficient milk for both bottling and manufacturing. The Global Dairy Trade Auction will take place Tuesday, providing an indication of world prices and demand.
AVERAGE CLASS III PRICES
| 3 Month: | $22.29 |
| 6 Month: | $22.27 |
| 9 Month: | $22.06 |
| 12 Month: | $21.69 |
CHEESE
There is still quite a way to go for block cheese price to reach back to the level it was in early January. Barrels are almost back to the highs established Jan. 14. What is interesting is that Class III milk futures are quite a bit higher than they were at that time. Some if this is due to the strength of dry whey and some due to optimism that price will continue to increase. There has been some indication that cheese demand has slowed slightly.
BUTTER
Buyers have been more aggressive in butter recently as they are looking ahead to fill orders and anticipated demand for the second quarter. Plants are preparing for Easter demand to have sufficient product available to meet demand. Cream is more available which is allowing churning activity to increase. There is indication inventory is beginning to increase.
OUTSIDE MARKETS SUMMARY
March corn gained 4.75 cents, closing at $6.5575. March soybeans fell 13 cents, ending at $15.70, with March soybean meal down $8.20 per ton, closing at $448.40. March wheat closed 1.50 cents higher at $7.9925. February live cattle gained $0.55, ending at $142.42. March crude oil jumped $2.36, ending at $95.46 per barrel. The Dow declined 172 points, closing at 34,566, while the NASDAQ was unchanged at 13,791.
