MILK:
The weakness of Class III futures was due to lower cheese and dry whey prices. This does not signal a change in trend but just what business was being done for the day. Even when a market is trending there are always price retracements. Cheese inventory is lower than a year ago but there is sufficient supply for demand. Milk production running below a year ago has not resulted in supply tightness. Fluid milk demand is back to the levels it was before the holidays when schools were closed. Spot milk prices have strengthened as reduced milk supplies are available to the spot market. Reduced milk output will not impact the market significantly as it is the time of year when overall demand is generally slower. Class IV futures were steady to higher due to the higher butter price. However, traders lacked conviction that prices will trend higher in the near term.
AVERAGE CLASS III PRICES:
| 3 Month: | $20.56 |
| 6 Month: | $20.05 |
| 9 Month: | $19.73 |
| 12 Month: | $19.50 |
CHEESE:
Cheese production remains steady with plants having sufficient milk for needs. More milk is moving to bottling for schools leaving less available than had been over the holidays. Milk receipts at the plant level are improving seasonally but supplies do not exceed demand. Retail demand is steady while food service demand is lighter than expected. This pattern is expected to remain for the near term.
BUTTER:
The butter price is expected to remain supported and could follow a similar pattern as last year. Buyers will purchase for immediate demand and contracted supplies. There will also be interest in purchasing and slowly building inventory as a hedge in case the milk supply tightens as the year progresses and prices increase.
OUTSIDE MARKETS SUMMARY:
March corn closed up 0.25 cent per bushel at $4.5800, March soybeans closed down 0.50 cent at $9.9725 and March soybean meal closed down $3.80 per ton at $303.50. March Chicago wheat closed up 2.00 cents at $5.4250. February live cattle closed up $0.38 at $195.58. February crude oil is up $0.87 per barrel at $74.43. The Dow Jones Industrial Average is down 178 points at 42,528 with the NASDAQ down 375 points at 19,490.
