MILK
Milk futures posted strong gains Thursday with Class III outpacing Class IV contracts. Class III futures were unchanged to 54 cents higher with June showing the greatest gain. This moved April through July contracts above $23. Class IV futures were unchanged to 33 cents higher with June showing the greatest gain. April through June closed at or above $25 and the highest price Class IV milk has ever been. Traders have been bullish the market for some time, and anything that points to higher prices is magnified through trading activity. Higher milk prices are warranted due to increasing feed costs and high prices for other goods and services. It will be interesting to see just how this pans out, as there may be a level at which demand slows due to high prices. This has happened in the cattle market, as boxed beef prices have declined for a number of weeks due to consumers purchasing less-expensive cuts of meat. Even though feed prices are increasing, cattle futures have been declining. Dairy may follow a similar pattern if demand is affected by higher prices. I am not saying they will, but the job of high prices is to slow demand. The February Federal Order prices were announced Wednesday with Class II at $23.79, up $0.96 from January. Class III was announced at $20.91, up $0.53 from a month ago. Class IV was announced at $24.00, up $0.91 from January.
AVERAGE CLASS III PRICES
| 3 Month: | $23.14 |
| 6 Month: | $23.18 |
| 9 Month: | $22.86 |
| 12 Month: | $22.31 |
CHEESE
Manufacturers report demand is steady to very busy. Some report that they are behind on production, which is mainly due to ongoing issues of having sufficient staff available to process that milk. It is interesting that spot milk in the Midwest remains at class or slightly below. This may be tied to plants not quite yet up and running at capacity. USDA will release the January Dairy Products report Friday, which will show how much cheese and butter had been produced during the month.
BUTTER
Churns are busy utilizing available cream supply as cream multiples are at reasonable prices. Many plants report they are running near capacity depending on location with still some challenges with not having a full staff of employees. Price has now regained about half of what it lost in January.
OUTSIDE MARKETS SUMMARY
March corn gained 12.25 cents, closing at $7.5125. March soybeans closed 2.75 cents higher at $16.8025 with March soybean meal up $3.70 per ton, closing at $461.40. March wheat exploded, closing $2.3050 cents higher at $12.89. Yes, that is correct. There are no price limits when a contract is in delivery and a price squeeze is taking place. April live cattle fell $1.75, closing at $138.35. April crude oil fell $2.93 per barrel, closing at $107.67. The Dow declined 97 points, closing at 33,795, while the NASDAQ declined 214 points, closing at 13,538.
