MILK
Milk production is improving in many areas as milk receipts at the plant level are increasing. It certainly seems that spring is here and spring flush is beginning. Milk production is not expected to overwhelm the market but it will make more milk available for both bottling and manufacturing.
The substantial increase in Class III milk futures seems to be psychologically driven rather than fundamentally driven. There has been no change in fundamentals that made the market more bullish. It seems it was a matter of initial strong buying which triggered more buying to liquidate positions and preserve some profit or to get out of the way in case the market continues to increase. An increase in underlying cash will now already be factored in. This is an indication of the volatility to be seen as the year progresses.
A strong case can be made for higher prices but it may be difficult to see a strong uptrend over the next few months. Demand is good but may not be enough to offset increasing milk production. Further strength may be seen in the overnight market as liquidation may continue by those who have not been watching the market today.
AVERAGE CLASS III PRICES
| 3 Month: | $16.49 |
| 6 Month: | $17.24 |
| 9 Month: | $17.65 |
| 12 Month: | $17.75 |
CHEESE
The stability of block cheese prices and the increase in barrels may indicate a bottom might have been reached. This could bring buyers into the spot market more aggressively as they take advantage of lower prices to purchase for aging programs or later demand. Spot milk prices are variable with prices from $6 under class to $0.50 over class. Most of it is $3 under to $0.50 over. Manufacturers have sufficient milk available for production.
BUTTER
Price continues to hang out in a range. It may not break out to the upside even though Easter is a high-demand period. Buyers may have already purchased a significant amount of butter, leaving them less aggressive in the spot market. However, overall demand is strong and expected to increase domestically. International demand continues to be subdued with exports remaining slower than a year ago.
OUTSIDE MARKETS SUMMARY
May corn closed down .50 cent per bushel at $4.4125, May soybeans closed up .75 cent at $11.9675 and May soybean meal closed down $2.80 per ton at $336.40. May Chicago wheat closed down 3.25 cents at $5.4425. April live cattle closed up $1.68 at $189.93. April crude oil is up $2.16 per barrel at $79.72. The Dow Jones Industrial Average is up 38 points at 39,043 with the NASDAQ down 88 points at 16,178.
