MILK:
Class III futures in nearby contracts quickly faded when the cheese, butter, and dry whey spot prices declined. Traders had been anticipating that there would be limited upside price potential, and it took place today as prices fell back. Class IV futures posted mostly double-digit gains as traders focused on the strength of nonfat dry milk. With milk production increasing seasonally as spring flush continues, there is sufficient milk for both bottling and manufacturing. Inventory has been increasing as demand is met, and extra inventory is moving into storage. The USDA will release the March Milk Production report on Tuesday, providing direction for the market in the near term. Milk production is expected to be above a year ago as more cows have been added to the nation's herd. I estimate milk production to be 0.5% above a year ago. The difficult aspect of the market is whether cow numbers increased or decreased compared to February. Lower milk prices may have increased culling, but high replacement prices may still favor holding onto cows.
AVERAGE CLASS III PRICES:
| 3 Month: | $17.54 |
| 6 Month: | $17.86 |
| 9 Month: | $18.03 |
| 12 Month: | $18.02 |
CHEESE:
Cheese prices fell back after reaching a threshold. This does not mean that prices will not be able to exceed that level at some point, but buyers have reached a level at which they do not want to pay more for now. Higher milk production is increasing plant schedules as the milk receipts are increasing. More milk being processed means more cheese being available to the market.
BUTTER:
The butter is increasing as abundant cream supplies keep churning active. Demand is being met without difficulty, and excess is moving to storage. Buyers have been able to purchase loads for immediate needs and also to increase ownership for later in the year. This may limit the upside potential as the year progresses.
OUTSIDE MARKETS SUMMARY:
May corn closed down .50 cent per bushel at $4.8175, May soybeans closed down 7.00 cents at $10.2950 and May soybean meal closed down $2.70 per ton at $292.90. May Chicago wheat closed down 10.25 cents at $5.3850. June live cattle closed down $0.33 at $203.75. June crude oil is down $1.60 per barrel at $62.41. The Dow Jones Industrial Average is up/down 972 points at 38,170 with the NASDAQ down 416 points at 15,871.
