GENERAL OVERVIEW:
Milk futures were hit hard today, with the Class IV contracts showing the greatest losses. The weakness in the butter, cheese and nonfat dry milk prices might indicate the market found a level of price resistance. The World Agricultural Supply and Demand Estimates report will be released on Tuesday.
MILK:
The weakness in the spot markets took a lot of steam out of futures today. The recent trend higher was not expected to continue without a retracement. The hope is that the price weakness will be limited. However, the current fundamentals do not suggest that milk prices will continue to trend higher anytime soon, even though world dairy prices have increased. USDA will release the World Agricultural Supply and Demand Estimates report on Tuesday, which will set some direction for grain prices. The report will contain the estimates for milk production, milk prices and dairy product prices for this year. This report is not a market-mover, but it will provide some indication of what is anticipated for average prices by the USDA. Generally, the report changes relative to what the cash and futures prices have been doing since the last report. Based on that, estimated prices will be higher than the previous month.
AVERAGE CLASS III PRICES:
| 3 Month: | $16.26 |
| 6 Month: | $15.86 |
| 9 Month: | $17.20 |
| 12 Month: | $17.25 |
CHEESE:
Cheese futures fell lower than the decline in the spot price suggested. Traders seem to think there will be further downside price potential. There is sufficient cheese available for demand, with strong manufacturing schedules expected to keep the supply of cheese readily available to the market.
BUTTER:
The drop in the butter price was expected, but not of the magnitude it fell today. There were 27 unfilled bids at the close of spot trading, possibly indicating limited weakness, as buyers might purchase aggressively at a lower price. Buyers may remain active to purchase supplies to avoid paying higher prices later if they were to develop.
OUTSIDE MARKETS SUMMARY:
March corn closed down 1.50 cents per bushel at $4.2875, March soybeans closed down 4.50 cents at $11.1075, and March soybean meal closed down $5.80 per ton at $297.80. March Chicago wheat closed down 1.00 cent at $5.2875. April live cattle closed up $0.95 at $238.20. March crude oil is up $0.88 per barrel at $64.43. The Dow Jones Industrial Average is up 20 points at 50,136, with the NASDAQ up 207 points at 23,239.
