Class III milk futures did an about-face around the time of spot trading with the strength likely the result of traders putting significant emphasis on the World Agricultural Supply and Demand Estimates (WASDE) report. Generally, this report does not move the market, as it is USDA's estimates of milk production, milk prices and product prices. These estimates change from month to month depending on market strength or weakness. However, traders are friendly to dairy prices due to that being the cry from most analysts and articles that are published. So, the decrease in estimate of milk production for the year from 227.7 billion pounds in January to the current estimate of 227.2 billion pounds provided some fuel for bullish traders. If realized, this would be an increase of only 900 million pounds from 2021. Class III price was raised $0.65 to an estimated $20.30. Class IV price was raised $1.40 to an average of $22.30 compared to the January estimate. The all-milk price was raised $0.95 to an average of $23.55. USDA extended the signup period for the Dairy Margin Coverage program to March 25. Enrollment in the program is at 48% of what it was last year, prompting USDA to extend the enrollment period.
AVERAGE CLASS III PRICES:| 3 Month: | $21.74 |
| 6 Month: | $21.91 |
| 9 Month: | $21.78 |
| 12 Month: | $21.42 |
The block/barrel spread has moved to a normal 4.25 cents, as barrel weakness moved price below blocks. The market is likely to remain choppy for a period as it tries to balance supply with demand. Super Bowl orders have been filled for some time now. USDA raised its estimate for cheese price from $1.8750 to $1.90 for the year. Dry whey showed a large increase of 6 cents from January with the current estimate of 70.50 cents this year.
BUTTER:USDA raised its estimate for butter price by 9 cents to an average of $2.39 for this year. Nonfat dry milk was raised 11.50 cents to an average of $1.6650. The combination of them raising the estimates for milk prices and production prices along with reducing milk production was the catalyst that pushed milk futures higher Wednesday.
OUTSIDE MARKETS SUMMARY:March corn jumped 14.50 cents, closing at $6.4675. March soybeans jumped 25.75 cents, closing at $15.9475, with March soybean meal up $7.80 per ton, closing at $461.90. March wheat gained 6.25 cents, ending at $7.85. February live cattle gained $0.92, closing at $142.90. March crude oil increased $0.30, closing at $89.66 per barrel. The Dow gained 305 points, closing at 35,768, while the NASDAQ gained 296 points, closing at 14,490.
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