Wednesday Closing Dairy Market Update - Spot Milk Prices Weaken

MILK:

Traders focused on the weakness of barrel cheese rather than the strength of blocks. This put pressure on Class III futures, resulting in some contracts posting double-digit losses. It is uncertain whether cheese prices reached a threshold, but some traders did not want to take the chance that further price weakness could unfold. After all, cheese prices have increased more than expected over the past two weeks. Milk output continues to increase as the spring flush season continues. More spot milk will be available this weekend as Easter will affect some processing schedules. Spot milk prices had been declining, with prices as much as $6 below class early this week. This discount is not expected to last long, but it does indicate heavier milk production. Thursday is the last day to trade futures and options this week, as the markets will be closed on Good Friday.

AVERAGE CLASS III PRICES:

3 Month:	$17.49
6 Month:	$17.77
9 Month:	$17.88
12 Month:	$17.87

CHEESE:

Cheese manufacturers have indicated that demand has improved slightly. There is anticipation of a further increase in demand, which should support prices. This does not mean that prices will increase substantially, but that they will hold near the current levels and slowly improve over time.

BUTTER:

The butter price continues its sideways range as retail demand improves, but demand from the food service industry is lower than expected. The cream supply remains heavy with some loads expected to back up somewhat over the Easter holiday. However, that is not expected to overwhelm the market, but it may lower cream prices.

OUTSIDE MARKETS SUMMARY:

May corn closed up 3.00 cents per bushel at $4.8425, May soybeans closed up 2.75 cents at $10.3875 and May soybean meal closed up $2.50 per ton at $296.70. May Chicago wheat closed up 5.75 cents at $5.4775. June live cattle closed up $2.28 at $202.08. May crude oil is up $1.14 per barrel at $62.47. The Dow Jones Industrial Average is down 700 points at 39,669, with the NASDAQ down 516 points at 16,307.