MILK
Cheese prices increased the past two days with the increase sending Class III milk futures substantially higher. It is too early to tell whether there has been a change of attitude by buyers of cheese making them willing to step up and purchase for the longer term. With the uncertainty of milk supply for later in the year, buyers may be more willing to purchase ahead and pay for storage rather than wait to purchase until after spring flush. If milk prices improve significantly, there may be a desire to keep barns full or add cows if they are available. The tightening heifer replacement market and lower cow numbers may be limiting factors to milk production growth. Reasonable grain prices and the potential for lower grain prices this year may impact the potential of milk prices. There generally is a strong correlation between cheap feed prices and cheap milk prices. USDA reports that there is 3% of the corn crop planted compared to 3% a year ago.
AVERAGE CLASS III PRICES
| 3 Month: | $16.19 |
| 6 Month: | $17.13 |
| 9 Month: | $17.59 |
| 12 Month: | $17.68 |
CHEESE
Cheese prices have had impressive gains over the past two days moving cheese prices to the highest level since March 1 for blocks and March 7 for barrels. Fundamentals have not changed in the market, but the perception of traders seems to have changed. There is some concern that the strength may not hold as higher prices may bring sellers back into the market as they want to move supply. At some point, the market will trend higher, but it may be too early as spring flush is taking place.
BUTTER
Butter continues to find solid support and seems to be heading toward the $3.00 level. Even though inventory in February was higher than the previous year, buyers are interested in increasing ownership as a hedge against potential supply tightening ahead of the usual stronger demand period during the second half of the year. The strength of the price already at this time of the year could set the stage for continued higher prices as the second half of the year unfolds.
OUTSIDE MARKETS SUMMARY
May corn closed up 1.25 cents per bushel at $4.3550, May soybeans closed down 3.50 cents at $11.8150 and May soybean meal closed up $2.90 per ton at $336.00. May Chicago wheat closed down 1.50 cents at $5.6575. June live cattle closed up $1.28 at $173.33. May crude oil is down $0.42 per barrel at $86.49. The Dow Jones Industrial Average is down 11 points at 38,893 with the NASDAQ up 5 points at 16,254.
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