MILK:
After the decline of spot cheese and butter prices earlier, prices are coming back with the potential of regaining the losses. Milk futures are leading the way with contracts making new highs even though spot prices are lower than they had been the last time futures were at these levels. World dairy prices are increasing, which is causing U.S. prices to increase as export demand remains strong. So far, milk production is holding near the level of last year despite lower cow numbers. However, there is little indication that production will increase significantly anytime soon. Milk output may hold in a sideways pattern for a period with the potential for spring flush to be quite a bit less than previous years. Grain prices continue to increase as the concern over grain output from South America increases. The World Agricultural Supply and Demand Estimates report will be released on Wednesday and most likely will result in substantial market movement. The focus will be on production estimates from Brazil and Argentina for corn and soybeans. Higher grain prices continue to have a significant impact on dairy profitability.
AVERAGE CLASS III PRICES:
| 3 Month: | $21.61 |
| 6 Month: | $21.73 |
| 9 Month: | $21.61 |
| 12 Month: | $21.25 |
CHEESE:
Block cheese price did not move Monday, but that did not dampen the exuberance of the market. The fact that price did not decline and that barrel price is now above blocks increases the idea that blocks will move to keep pace with barrels. With higher global prices, steady demand and buyers looking ahead to purchase supplies even into the second quarter, prices will remain supported. Cheese inventory is higher than a year ago, but that is not of any concern for the time being.
BUTTER:
Butter is in strong demand from many countries, keeping export interest strong. Churning is increasing as cream become move available to the market. This should alleviate some of the tighter supply of bulk butter. Demand is strong and is expected to remain that way as butter supplies are limited in other countries as well. Inventory should slowly build but will take some time to replenish to a comfortable level.
OUTSIDE MARKETS SUMMARY:
March corn jumped 14.75 cents, closing at $6.3525. March soybeans jumped 28.25 cents, closing at $154.8175, with March soybean meal up $8.90, closing at $452.80 per ton. March wheat gained 5.50 cents, ending at $7.6875. February live cattle declined $0.22, closing at $141.82. March crude oil declined $0.99 per barrel, closing at $91.32. The Dow closed 1 point higher at 35,091, while the NASDAQ declined 82 points, closing at 14,016.
