GENERAL OVERVIEW:
Class III milk futures held up well despite the weakness in block cheese. The market had been overdone to the downside, with some stability expected. Milk production across much of the country has been steady over the past week.
MILK:
There has been little change in milk production over the past week, with temperatures moderating and a warmer trend coming. Spring flush is not too far in the future, which could result in a significant increase in production due to the high cow numbers. The handling of the increased milk production this year should not be an issue due to greater manufacturing capacity. There is little to hold back growth in milk production. Lower milk prices do not have the usual impact they normally would have due to the high prices received for calves to supplement farm income. There is no tightness or shortage of milk for bottling and manufacturing. Class III milk futures held up well despite the decline in the block cheese price. The market had been overdone to the downside the past two days, with contracts remaining in line with cash today.
AVERAGE CLASS III PRICES:
| 3 Month: | $16.03 |
| 6 Month: | $16.67 |
| 9 Month: | $17.09 |
| 12 Month: | $17.00 |
CHEESE:
Most manufacturers are running on full schedules, with milk production steady this week, but at a higher level than a year ago. There is sufficient spot milk available with spot prices at $1.00 to $4.00 under class. The ample supply of milk continues to limit the upside price potential for spot cheese. Export demand is reported to be strong, but it is not enough to support the cheese price. However, any demand is helpful and may keep the price from falling back too far.
BUTTER:
Manufacturers operate on full schedules seven days a week. Cream supplies are plentiful, keeping plants supplied with limited needs to come to the spot market. Retail butter demand is strong and exceeding last year's level. Food service demand is lower than last year and may not change much in the near term. Even though the butter price has increased, it is still $0.97 per pound below the recent price on the Global Dairy Trade auction and should keep export demand strong.
OUTSIDE MARKETS SUMMARY:
March corn closed down 1.25 cents per bushel at $4.2750, March soybeans closed up 1.50 cents at $11.2400, and March soybean meal closed up $2.20 per ton at $303.00. March Chicago wheat closed up 9.00 cents at $5.3725. April live cattle closed up $3.55 at $240.98. March crude oil is up $0.67 per barrel at $64.63. The Dow Jones Industrial Average is down 67 points at 50,12, with the NASDAQ down 36 points at 23,066.
