MILK
Class III milk futures showed a strong rebound triggered by increasing cheese prices. This may be the beginning of a sharp retracement as we have seen in the past. However, buyers of cheese may not be quite as aggressive, as there is an indication of demand slowing. Class IV milk futures were unchanged to slightly lower. Traders were not confident the strength of butter price will continue. Milk production continues to increase seasonally. Demand from manufacturing is strong while bottling demand is steady. Bottling for school accounts will be dropping off over the next few weeks as schools close for the summer. Overall, the supply and demand for milk is balanced. Milk production is running below a year ago and may likely remain that way. The crop situation this year is concerning in many areas of the western half of the country. A shortage of feed and high prices may be too much for some farms to remain in business or to keep the herds at current levels. The question is whether other farms will take up the slack and increase their herds due to location and access to feed supply along with a reduced cost of production. The trend has been for fewer farms but not fewer cows. That trend is expected to continue.
AVERAGE CLASS III PRICES
| 3 Month: | $24.16 |
| 6 Month: | $23.59 |
| 9 Month: | $22.96 |
| 12 Month: | $22.23 |
CHEESE
Those cheese plants that are not full of milk are actively purchasing spot milk to manufacture into cheese to fill orders. There does not seem to be a slowing of demand from retail. Cheese movement seems to be rather steady from week to week. However, there remains uncertainty over ongoing demand. World price has softened -- not because of an overabundance of supply, but due to the state of world economies and price resistance.
BUTTER
The butter market is a mixed bag. Some plants are running on lighter schedules due to more cream being pulled for ice cream and other related product production. Cream is generally available but not quite as abundant as it has been in previous weeks. Supply is available for demand and to increase inventory. Price is expected to remain sideways to lower.
OUTSIDE MARKETS SUMMARY
May corn jumped 15.75 cents, closing at $8.0225. May soybeans gained 20.25 cents, closing at $16.5025, with May soybean meal down $7.30 per ton, closing at $400.60. May wheat jumped 25.50 cents, closing at $11.0875. June live cattle gained $1.17, ending at $133.57. June crude oil jumped $5.95, closing at $105.71 per barrel. The Dow declined 327 points, ending at 31,834, while the NASDAQ fell 373 points, closing at 11,364.
