GENERAL OVERVIEW:
Milk futures were hit hard today, with Class III futures falling more than Class IV futures. The butter price fell more than block cheese, but the increase in nonfat dry milk offset some of the weakness. USDA increased its estimate for milk output and milk prices this year.
MILK:
Milk futures were under pressure today, with Class III showing most of the pressure. The decline of the block cheese price triggered the selling, pushing the April contract limit down to the lowest level since February 17th. This has eliminated the bullishness that has recently developed as the block cheese price has been slowly improving. Milk production has been significantly higher than a year earlier for quite some time, and higher milk output is expected to continue through this year.
USDA raised its estimate for milk production on the World Agricultural Supply and Demand Estimates report released today. They estimate milk output at 234.7 billion pounds, up 200 million pounds from the February estimate. If realized, it would be an increase of 3.2 billion pounds from 2025. The estimate for the Class III average price remained unchanged at $16.65. This would be $1.36 below 2025. The estimate for the Class IV price was raised by $1.45 from the February estimate, but this would be $0.23 below a year ago. The All-milk price was raised to $19.70, up $0.75 from the February estimate.
AVERAGE CLASS III PRICES:
| 3 Month: | $16.45 |
| 6 Month: | $17.10 |
| 9 Month: | $17.51 |
| 12 Month: | $17.50 |
CHEESE:
The block cheese price fell similarly to today on Feb. 26 and then recovered quickly. The hope is that buyers will be aggressive buyers on the decline today, resulting in a price rebound. The USDA raised its estimate for the average cheese price to $1.6150, up a penny from the February estimate, but $0.17 below 2025. Unfortunately, the dry whey price was reduced by 3.00 cents to an average of 66.00 cents per pound. This is 6.00 cents higher than last year.
BUTTER:
The last time we saw a one-day decline in the butter price of this magnitude was on May 28, 2024. Buyers did not need to bid the market higher as they have been purchasing quite a bit of supply over the past number of weeks. They remained interested in buying, but at lower prices. The USDA raised its estimated butter price to $1.87. up $0.19 per pound from their February estimate. This would be $0.35 lower than 2025. The nonfat dry milk price was raised by $0.0750 to $1.39 per pound. This would be $0.16 above last year.
OUTSIDE MARKETS SUMMARY:
May corn closed down 1.50 cents per bushel at $4.5225, May soybeans closed up 5.50 cents at $12.0175, and May soybean meal closed up $1.00 per ton at $314.50. May Chicago wheat closed down 12.25 cents at $5.9100. April live cattle closed up $2.23 at $232.38. April crude oil is down $7.91 per barrel at $86.86. The Dow Jones Industrial Average is down 34 points at 47,707, with the NASDAQ is up one point at 22,697.
