MILK
Milk futures showed minor volatility but did not indicate any price direction. Even with that, there were over 900 futures contracts traded in the May Class III futures contract. Underlying cheese prices did not generate any excitement for the trade. There is hope prices will trend higher, but there is caution over it continuing to chop around as it has over the past months. Milk production in much of the country continues to steadily increase. The market is not awash in milk, but it is sufficient for demand with extra milk being offered at discounts. Some concern is being expressed over the increased capacity of manufacturing that is taking place or being planned and potentially not having sufficient milk available to fill those facilities in the future. The continued interest in beef on dairy tightening the heifer supply and continued lower milk prices may reduce cow numbers eventually tightening the milk supply and leaving plants with more capacity and insufficient milk supply. USDA will release the World Agricultural Supply and Demand report on Thursday which will provide USDA's estimates for milk production, milk prices, and dairy product prices for the year.
AVERAGE CLASS III PRICES
| 3 Month: | $16.04 |
| 6 Month: | $16.96 |
| 9 Month: | $17.47 |
| 12 Month: | $17.57 |
CHEESE
Manufacturing plants have little to worry about as far as milk availability is concerned. The Upper Midwest is reporting spot milk as much as $6.00 below class. Spring flush will continue for another two months which will reduce the concern over supply. Cheese demand is variable, and somewhat dependent on variety. The tightness of the barrel cheese supply has loosened a bit which has resulted in barrel prices declining below blocks.
BUTTER
The butter price is not yet ready to move to or above the $3.00 level. Churning is active which keeps sufficient supply for demand and allows for extra to be put into storage. Inventory is slightly above a year ago but is not a concern for the market. Eventually, the cream supply will tighten, and butter production will slow. Inventory will then be utilized to meet demand.
OUTSIDE MARKETS SUMMARY
May corn closed up 3.00 cents per bushel at $4.3425, May soybeans closed down 9.75 cents at $11.6475 and May soybean meal closed down $4.70 per ton at $330.90. May Chicago wheat closed up 0.75 cent at $5.5850. June live cattle closed down $2.00 at $172.85. May crude oil is up $1.00 per barrel at $86.23. The Dow Jones Industrial Average is down 422 points at 38,462 with the NASDAQ down 136 points at 16,170.
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