MILK:
Class III futures took a bigger hit than Tuesday even though cheese prices declined similarly both days. Wednesday was a matter of traders who had been holding out hoping for higher prices, giving in and liquidating more positions. This weakness has not changed the overall bullish attitude of the market. There is some concern developing over the level of demand due to inflation. The Fed increased the interest rate by a quarter percent Wednesday to begin the process of trying to slow inflation. The decline of futures has been similar to the decline that took place in January. It is difficult to tell whether this is just a healthy price retracement or whether the market will settle into a lower sideways pattern. The Global Dairy Trade Auction took place Tuesday with the trade weighted average declining 0.9%. This is the first decline in five consecutive events. There were 117 bidders involved with 23,348 metric tons (mt) sold. Anhydrous milk fat increased 0.4% to $7,111 mt or $3.23 per pound. Butter declined 1.8% to $6,958 per mt or $3.16 per pound. Cheddar cheese increased 0.3% to $6,412 per mt or $2.91 per pound. Lactose declined 0.6% to $1,618 pr $0.73 per pound. Skim milk powder gained 1.6% to $4,545 per mt or $2.06 per pound. Whole milk powder declined 2.1% to $4,596 per mt or $2.08 per pound.
AVERAGE CLASS III PRICES:
| 3 Month: | $22.86 |
| 6 Month: | $23.28 |
| 9 Month: | $23.28 |
| 12 Month: | $22.87 |
CHEESE:
Cheese prices are retracing as buyers remain less aggressive for the time being. It is uncertain just how much prices will retrace before buyers step back in to purchase. The market is not overwhelmed with supply but is somewhat balanced. Demand remains good. There are some contacts indicating some slowing of orders, but in general, demand remains steady.
BUTTER:
Price seems to be comfortable at the current level. Demand from the food service industry is a bit slower but still good. Churning has been active with plentiful cream supplies. This leaves sufficient for immediate orders as well as allows for building inventory. Some buyers have already turned their attention to potential demand later in the year and have already increased ownership in anticipation.
OUTSIDE MARKET SUMMARY:
May corn fell 28 cents, closing at $7.30. May soybean declined 9.50 cents, ending at $16.4925 with May soybean meal down $6.00 per ton, closing at $478.00. May wheat fell 85 cents, closing at $10.6925. April live cattle declined $1.50, ending at $139.35. April crude oil fell $1.40, closing at $95.04 per barrel. The DOW gained 519 points, closing at 34,063 while the NASDAQ jumped 488 points, closing at 13,437.
