MILK
The biggest item of interest was the fact that USDA reduced its estimate for milk production this year to 226.0 billion pounds, down 1.2 billion pounds from the February estimate, according to the World Agricultural Supply and Demand Estimates (WASDE) report released Wednesday. If this comes to fruition, milk production would be 300 million pounds below last year and the first decline in a long time. The estimates for milk price increased considerably with Class III to average $21.65, up $1.35 from the February estimate. Class IV is estimated to average $23.70, up $1.40. The all-milk price is estimated at $25.05, up $1.50 from the February estimate. It is interesting to see that Class IV is expected to be $2.05 higher than Class III and would be the first time in history for an inversion of this magnitude. Class III futures set back Wednesday, likely due to profit-taking due to the market being overdone to the upside. The market needed to take a breather with possibly some of this as a result of huge losses in energy, grain and livestock futures.
AVERAGE CLASS III PRICES
| 3 Month: | $23.68 |
| 6 Month: | $23.74 |
| 9 Month: | $23.37 |
| 12 Month: | $21.81 |
CHEESE
The increase of cheese prices Wednesday did nothing to stem the selling tide. There was no change in fundamentals and no change in overall bullishness. The market just needed to correct with some taking profits after the large price increases. USDA raised its price estimate for cheese to $2.03 per pound, up 13 cents from February. Dry whey price was raised only 0.50 cent to an average of 71 cents per pound.
BUTTER
The initial strength of butter during spot trading before settling back kept some negativity in the market. Price continues to work higher with the highs of early in the year likely where it might be headed. USDA increased its estimate for butter this year substantially from February. It now estimates butter price at $2.5750, up 18.50 cents from the previous month. Nonfat dry milk price was raised 8 cents to $1.74 per pound.
OUTSIDE MARKETS SUMMARY
March corn fell 19.50 cents, closing at $7.35. March soybeans fell 18 cents, closing at $16.8650, with March soybean meal up $5.10 per ton, closing at $495. March wheat fell 73.50 cents, ending at $11.9950. April live cattle declined $1.47, closing at $137.57. April crude oil plummeted $15 per barrel, closing at $108.70. The Dow jumped 654 points, closing at 33,286, while the NASDAQ jumped 460 points, closing at 13,256.
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