MILK
The May and June Class III futures have moved above Class IV futures rather than have the strong discount they had to Class IV futures for quite a while. Milk production continues to slowly increase in the country, but the increase is below the levels of last year. That is not expected to change, as rising feed prices and increasing cost of production slow the desire of farmers to increase cow numbers. Along with that, the supply of replacement heifers is tight, and cow prices are relatively high. Cows from farms that exit the business are moving to other farms rather than all going to slaughter. In February, cow numbers increased by 3,000 head from January. This was the first month-over-month increase since June. It does not necessarily mean that cow numbers have turned a corner and will steadily increase. It may mean that cow numbers have found some stability for the time being. Farmers are not interested or cannot afford to increase their herds but will work with what they have. Even though milk prices are high, costs are high, leaving profitability no better than a year ago or maybe even worse. The current fundamentals for grain do not indicate a change there anytime soon. We can only hope for some stability of feed prices or that milk prices outpace the gains of feed prices and everything else.
AVERAGE CLASS III PRICES
| 3 Month: | $24.83 |
| 6 Month: | $24.71 |
| 9 Month: | $24.35 |
| 12 Month: | $23.74 |
CHEESE
Cheese demand remains strong. Manufacturing facilities in the Midwest report many plants are nearly full or are full, which would make it difficult to take on much more milk to satisfy demand if it were to increase further. Plants may not be completely full of milk but are full relative to the current workforce they have and the shortage of truck drivers to deliver milk or products. Some plants only want sufficient milk for processing and filling orders. There is a desire to increase inventory to prepare for later demand, but it has been difficult to accomplish that task.
BUTTER
Churning remains active, but cream supplies are tightening due to increasing demand from ice cream manufacturers. Ice cream manufacturers are trying to build inventory ahead for the summer months and increased demand.
OUTSIDE MARKETS SUMMARY
May corn gained 7.25 cents, closing at $7.8350. May soybeans gained 5.75 cents, closing at $16.76, with May soybean meal down $2.70 per ton, closing at $458.20. May wheat gained 9.75 cents, closing at $11.1350. April live cattle gained $0.67, ending at $140.62. May crude oil jumped $3.65, ending at $104.25 per barrel. The Dow gained 344 points, closing at 34,565, while the NASDAQ gained 272 points, closing at 13,644 points
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