MILK
Milk futures exhibited continued strength today. The block/cheese price spread widened with a spread price of 4 cents. This does not indicate any specific price direction but does move the spread to a more historical normal. The early exuberance of higher Class III milk futures prices was trimmed with contracts closing with single-digit gains. The market will need to prove itself or futures will fall again if the underlying cash remains choppy without establishing a higher trend.
Improving milk output may limit the upside price potential as it is the time of year when demand is steady with milk supply increasing. The March Class III contract was adjusted lower due to the release of the weekly AMS prices yesterday impacting the calculation of the potential March class price. Class IV milk futures should remain higher as butter continues to hold well and provide support.
AVERAGE CLASS III PRICES
| 3 Month: | $16.49 |
| 6 Month: | $17.27 |
| 9 Month: | $17.70 |
| 12 Month: | $17.81 |
CHEESE
The bounce of block cheese price was certainly positive to the market and supported the strong gains in milk futures seen on Wednesday. However, further gains will be necessary to sustain the gains in milk futures or prices will fall back. Cheese buyers might be more aggressive and purchase due to the market potentially making a bottom. However, cheese purchases may be limited to prevent building inventory too quickly or too early.
BUTTER
Price has moved to the top end of the trading range as demand improves with the Easter season just around the corner. Once retail orders are filled and the holiday is over, the market may settle back again as price and demand will need to be balanced to keep supply from building up.
OUTSIDE MARKETS SUMMARY
May corn closed down 7.50 cents per bushel at $4.3375, May soybeans closed down 1.50 cents at $11.9525 and May soybean meal closed up $1 per ton at $337.40. May Chicago wheat closed down 12 cents at $5.3225. April live cattle closed down $2.98 at $186.95. April crude oil is up $1.34 per barrel at $81.06. The Dow Jones Industrial Average is down 138 points at 38,906 with the NASDAQ down 49 points at 16,129.
