MILK
Traders anticipated and waited for the market to move higher on Tuesday. When support came from increasing underlying cash prices, traders were quick to buy into the market. However, the exuberance outran the underlying market resulting in a significant price correction. Steady cheese prices did not provide any price direction but the weakness of dry whey and little interest in buying cheese today triggered the negativity.
Milk production is following the pattern set so far this year. A decrease in production was expected, but it has not declined as much as some had anticipated. The culling of dairy cattle was expected to be heavier than it has been, which has kept sufficient milk available for bottling and manufacturing.
Inventory of cheese is in line with a year ago with the potential for some growth before the summer when inventory declines during the second half of the year. Current Class III futures are $18 or above through March 2025. This would certainly improve farm income but much higher prices are needed to turn many farms back into profitability.
AVERAGE CLASS III PRICES
| 3 Month: | $17.30 |
| 6 Month: | $17.99 |
| 9 Month: | $18.15 |
| 12 Month: | $18.10 |
CHEESE
Buyers were not aggressive during spot trading. Business that needed to be done was done on Monday. Prices have moved higher and likely will not fall back much, but they may have difficulty moving higher in the near term. Inventory is likely not being built but maintained similar to a year ago, leaving supply sufficient but not burdensome. USDA will release the March Cold Storage report on Wednesday, providing the level of inventory and an indication of demand during the month.
BUTTER
The price decline of butter pulled it back from the $3 level, but the weakness is likely temporary as the butter price will likely continue to move higher as time progresses. Demand is good and should improve as the year progresses. Exports are expected to improve but gains may be limited unless prices remain competitive and demand improves.
OUTSIDE MARKETS SUMMARY
May corn closed up 3.25 cents per bushel at $4.4300, July soybeans closed up 5.50 cents at $11.8200 and July soybean meal closed up $1.30 per ton at $346.10. July Chicago wheat closed up 15.25 cents at $6.0275. June live cattle closed down $0.90 at $177.15. June crude oil is up $1.45 per barrel at $83.35. The Dow Jones Industrial Average is up 264 points at 38,504 with the NASDAQ up 245 points at 15,697.
