GENERAL OVERVIEW:
Spot cheese prices increased, but the weakness of dry whey offset the strength of blocks. Class III futures closed lower as the increase in barrels has no impact on the market in the pricing calculation. Class IV was under pressure due to the lower butter price.
MILK:
After the CME settled for the day, Class III futures showed further pressure as trading continued until the close. This further pressure that was seen after the market settled for the day might be reflected in the overnight market. Futures have been showing some strength in the past few days, but that may come to an end. If cheese prices decline and further weakness is seen in dry whey, futures will retrace. USDA will release the February Milk Production report on Friday, which is expected to show strong milk output and increased cow numbers. That has been the pattern for more than a year and is not expected to change anytime soon. The percentage of gain may not be as much due to the month being compared to a strong month last year. However, the USDA estimates the average milk output this year to be substantially higher than a year ago.
AVERAGE CLASS III PRICES:
| 3 Month: | $16.70 |
| 6 Month: | $17.42 |
| 9 Month: | $17.80 |
| 12 Month: | $17.73 |
CHEESE:
The block cheese price recovered from the weakness of last week. This may raise concerns as to whether there will be more upside price potential. That may be the reason Class III futures saw further weakness as the day progressed.
BUTTER:
It is uncertain as to where the butter price will be supported. The decline of this level was unexpected, as retail demand has improved. Butter production has been strong, but inventory remained substantially below a year ago. Inventory is expected to show an increase for February on the Cold Storage report next week. However, the increase is expected to be less than usual and should keep inventory below that of a year ago.
OUTSIDE MARKETS SUMMARY:
May corn closed up 9.25 cents per bushel at $4.6325, May soybeans closed up 4.75 cents at $11.6175, and May soybean meal closed up $10.00 per ton at $321.70. May Chicago wheat closed up 14.50 cents at $6.0425. April live cattle closed up $0.18 at $235.40. April crude oil is up $3.73 per barrel at $99.94. The Dow Jones Industrial Average is down 768 points at 46,225, with the NASDAQ down 327 points at 22,152.
