MILK
Milk production is steady across much of the country but at lower levels than a year ago. However, even with lower milk output, milk prices have not been able to trend higher. Demand is also seasonally slower which is keeping prices at lower levels. If milk output remains as it is and demand increases as the year progresses, higher milk prices may materialize.
That may not take place for a time which will leave farms struggling to cover expenses. Replacement heifers are in demand with buyers facing high prices to obtain them. This has increased the demand for cows from farms going out of business and has pushed those prices higher as well. There will be a time when farmers decide to leave stalls empty rather than fill them with high-priced replacements. That may turn some from breeding beef on dairy back to just dairy again where more profitability may be realized.
All things take place in cycles and this cycle will develop over time and milk prices will be high again. The March Class III futures contract closed below $17, the lowest close since Jan. 31. Class IV futures showed losses in some contracts but continued to hold well.
AVERAGE CLASS III PRICES
| 3 Month: | $16.83 |
| 6 Month: | $17.42 |
| 9 Month: | $17.81 |
| 12 Month: | $17.92 |
CHEESE
Cheese demand is steady to slower depending on variety and location. There is some interest in building inventory with much of that due to building aging programs for later demand. Manufacturers are not interested in holding supply in anticipation of prices increasing over time. The cost of storage is too high for plants to speculate. Spot milk is tight with prices running at class or above. It will be interesting to see what the next few months do for supply and demand.
BUTTER
Churning remains active with an extra production being frozen for later demand. Buyers are actively contracting for second-quarter demand, ensuring they have supply and will not need to aggressively outbid other buyers when they need to fill orders. Price should remain supported but movement may be choppy while buyers and sellers take care of business.
OUTSIDE MARKETS SUMMARY
March corn closed down 6.50 cents per bushel at $4.2425, March soybeans closed down 15.75 cents at $11.7050 and March soybean meal closed down $1.50 per ton at $343.30. March Chicago wheat closed down 12 cents at $5.8550. April live cattle closed down $1.10 at $184. March crude oil is down 1.23 per barrel at $76.64. The Dow Jones Industrial Average is up 152 points at 38,424 with the NASDAQ up 204 points at 15,859.
