MILK
Traders tried to focus on the milk production report today but could not hold Class III futures steady to higher considering the weakness of barrel cheese and dry whey prices declining. The February milk production report was friendly for milk production but bearish for cow numbers.
Milk production in the top 24 states was down by 1.1% after the adjustment for Leap Day. This was neutral to friendly to the market as production continues to run below a year ago.
The big news is the number of cows compared to the previous month. It increased by 8,000 head from January for the top 24 states totaling 8.878 million head, down 61,000 head from January 2023. Milk production in the 50 states decreased by 1.3% when adjusted for leap day. Cow numbers totaled 9.330 million head, down 89,000 head from a year ago, but up 10,000 head from January.
It was anticipated that cow numbers would fall as low milk prices continued. This is somewhat bearish for the market as milk production remains better than expected due to the level of cow numbers.
It would initially seem that there had been a substantial miscalculation of cow numbers in January. However, USDA revised cow numbers 3,000 head lower in to top 24 states and 5,000 head lower in the U.S. from what was initially recorded last month. That makes this even more impressive for February. The April Class I price was announced today at $19.18, an increase of $0.38 from the previous month.
AVERAGE CLASS III PRICES
| 3 Month: | $16.36 |
| 6 Month: | $17.15 |
| 9 Month: | $17.67 |
| 12 Month: | $17.79 |
CHEESE
It is likely cheese buyers will not buy cheese aggressively after the milk production report. Milk production was lower but cow numbers increased, which would allow for milk production to improve more quickly if milk prices moved higher sometime over the next months. It may take longer for milk production to tighten as cow numbers remain higher than anticipated.
BUTTER
The butter price remains in a range developed over the past month. Now that much of the demand for the Easter season has been filled, the price may continue in this range for a period. Churning is active with cream supply sufficient for demand. Demand is strong enough to support the price but not reduce inventory and tighten supply. The cold storage report on Monday will provide a better picture of inventory.
OUTSIDE MARKETS SUMMARY
May corn closed down 0.50 cent per bushel at $4.39, May soybeans closed up 24 cents at $12.0950 and May soybean meal closed up $8.60 per ton at $342.50. May Chicago wheat closed down 7.50 cents at $5.45. June live cattle closed down $0.23 at $184.78. May crude oil is down $1.20 per barrel at $81.53. The Dow Jones Industrial Average is up 401 points at 39,512 with the NASDAQ up 203 points at 16,369.
