MILK
Traders did not react very much to the increase in cheese and dry whey prices. Class III futures contracts were mostly lower as traders were cautious about buying into the market on one day of price strength. They have done this numerous times before with each time resulting in lower prices after a few days. This will change at some point, but the time is not right presently. It may remain in this pattern as we move through spring flush.
The inability of the market to increase even after the discovery of avian flu in dairy cattle in multiple states leaves the market in a bearish grip. There is uncertainty about whether consumer demand may be impacted due to the avian flu in dairy cattle. It depends on how the news media spins it.
Overall milk production is improving each week as spring flush continues albeit at lower levels than a year ago. Buyers of cheese are not concerned over supplies and are not interested in buying and building supply on the what-if potential as the year progresses. Income over feed for February was $9.44. The average soybean meal price was released at $363.63 per ton. This was a decrease of $14.77 per ton from January. There will not be much for the Dairy Margin Coverage program payment and only to those who chose the $9.50 level.
AVERAGE CLASS III PRICES
| 3 Month: | $15.91 |
| 6 Month: | $16.62 |
| 9 Month: | $17.20 |
| 12 Month: | $17.39 |
CHEESE
There is concern cheese prices may retest the lows from December before the market may find a solid bottom. However, even a perception of a lower milk supply or a tighter market could trigger some more aggressive buying interest in the physical commodity. For now, buyers are content to buy as needed with some building of inventory for aging programs at these lower prices and without much fanfare. Cheese futures hold a premium to cash in anticipation of higher prices as the year progresses.
BUTTER
Butter is in a better posture than cheese at present. Even though inventory is higher than a year ago, buyers and manufacturers are interested in building inventory for later demand. There may be a limit to this but for now, that is supporting prices.
OUTSIDE MARKETS SUMMARY
May corn closed down 6.50 cents per bushel at $4.3550, May soybeans closed down 5.75 cents at $11.8575 and May soybean meal closed down $4.30 per ton at $333.40. May Chicago wheat closed down 3.25 cents at $5.5700. June live cattle closed down $4.93 at $175.33. May crude oil is up $0.54 per barrel at $83.71. The Dow Jones Industrial Average is down 241 points at 39,567 with the NASDAQ up 17 points at 16,397.
