MILK:
It was an uncertain market Tuesday with the weakness of barrels and butter triggering some liquidation. There is an overall idea that milk prices will remain strong and potentially strengthen further. Yet the uncertainty of the market does provide some uneasiness with traders. There is sufficient milk available for both manufacturing and bottling, which removes the concern over a shortage. But the potential for a significant increase of milk output anytime soon is not likely to happen. Even though milk prices are higher, input costs are higher, resulting in little gain in profitability. Farms are basically holding their own. Class IV futures continue to outpace Class III futures due to butter and nonfat dry milk prices compared to cheese and dry whey. USDA will release the World Agricultural Supply and Demand report Wednesday. The report should not have an impact on milk, but it may have a significant impact on feed prices.
AVERAGE CLASS III PRICES:
| 3 Month: | $21.42 |
| 6 Month: | $21.56 |
| 9 Month: | $21.48 |
| 12 Month: | $21.16 |
CHEESE:
The inversion of barrels over blocks swung back the other way Tuesday. Some anticipated the strength of barrels would pull blocks higher today, but that was not the case. However, blocks holding steady the past two days does indicate buyers and sellers may be comfortable at the current price. Spot prices may chop around in a sideways pattern for a period of time.
BUTTER:
It may be difficult for butter to increase very much for the time being. Production is increasing as cream is becoming more available. There remain issues with trucking that have hindered some deliveries of cream to churns as well as the distribution of butter to end users. Butter futures show no expectations for higher prices as the year progresses with current futures showing a slight discount to cash.
OUTSIDE MARKETS SUMMARY:
March corn declined 3 cents, closing at $6.3225. March soybeans declined 12.75 cents, ending at $15.69 with March soybean meal gained $1.30 per ton, closing at $454.10. March wheat gained 10 cents, closing at $7.7875. February live cattle closed $0.15 higher at $141.97. March crude oil fell $1.96, closing at $89.36 per barrel. The DOW gained 372 points, closing at 35,463 while the NASDAQ gained 179 points, closing at 14,194.
