MILK
Milk futures showed substantial gains Tuesday, spurred by higher block cheese and butter prices. Some contracts made new highs with April and May Class III contracts closing above $23 and April Class IV above $25. That is the first time Class IV futures have ever closed above $25 in history. Strong butter and nonfat dry milk prices continue to provide support. With escalating prices of everything else, higher milk prices are needed to keep up but are not putting more money in the bank account. The Global Dairy Trade auction took place Tuesday with 25,208 metric tons of product sold during the event. This is the fifth consecutive event that showed a gain. Anhydrous milk fat increased 2.1% to $7,048 per metric ton or $3.20 per pound. Butter increased 5.9% to $7,086 per metric ton or $3.21 per pound. Buttermilk powder increased 5.8% to $4,217 per metric ton or $1.91 per pound. Cheddar cheese increased 10.9% to $6,394 per metric ton or $2.90 per pound. Lactose increased 0.9% to $1.634 per metric ton or $0.74 per pound. Skim milk powder increased 4.7% $4,481 or $2.03 per pound. Whole milk powder gained 5.7% to $4,757 per metric ton or $2.16 per pound.
AVERAGE CLASS III PRICES
| 3 Month: | $22.83 |
| 6 Month: | $22.78 |
| 9 Month: | $22.52 |
| 12 Month: | $22.00 |
CHEESE
Cheese prices are supported with sufficient buying interest to keep prices high. There is sufficient cheese supply for demand with strong production and higher inventory than a year ago. The perception is that milk supply will tighten, which will reduce cheese production and raise prices. The last time cheese prices were at these levels in early January, demand began to be affected slightly. This could take place again as fuel prices and other prices escalate.
BUTTER
Butter will be interesting as the year progresses. World price is substantially higher than the U.S. price, which makes it attractive to international buyers. Domestic demand is strong, keeping buyers looking ahead to futures demand. Inventory is building, indicating strong production. Some of the gain of price Tuesday may also have been influenced by the old-crop/new-crop butter rule. On March 1, butter cannot be sold on the daily spot market that has been produced or stored prior to Dec. 1 of the previous year. However, butter produced or stored prior to Dec. 1 can be bought and sold in the country, leaving sufficient butter available for overall demand.
OUTSIDE MARKETS SUMMARY
March corn jumped 42.25 cents, closing at $7.3975. March soybeans jumped 61.25 cents, ending at $17.0550, with March soybean meal up $8.80 per ton, closing at $463.70 per ton. March wheat closed at $10.0175, up 73.75 cents. April live cattle declined $0.90 at $140.52. April crude oil jumped $7.69 per barrel, ending at $103.41. The Dow fell 598 points, closing at 33,295, while the NASDAQ declined 219, closing at 13,532.
