GENERAL OVERVIEW:
There was nothing extraordinary that took place during spot trading. Butter showed the most movement, but it was within the confines of what the market has shown previously.
MILK:
Class III milk futures have held surprisingly well despite the minor weakness in the block cheese price. There is an optimism that cheese prices will hold or potentially improve, but that will be up to continued strong demand. There has been concern raised over the reports of consumer demand for goods and services showing signs of weakness. The high fuel prices and the impact they are having on prices for most everything have resulted in consumers curtailing some of their usual activities. Restaurants are reporting slower traffic. The food service industry is an important part of dairy demand. The increased cost of trucking and shipping is being passed on to consumers who are making adjustments. Continued high fuel prices will have an impact on the price potential of dairy products.
AVERAGE CLASS III PRICES:
| 3 Month: | $17.45 |
| 6 Month: | $18.12 |
| 9 Month: | $18.29 |
| 12 Month: | $18.09 |
CHEESE:
The cheese price is not holding the Class III price up to the level of futures. The dry whey price is providing substantial support. One year ago, the dry whey price was 46.50 cents. The current price is 24.50 cents above a year ago. This adds $1.47 to the Class III price. Each one-cent move in the dry whey price equals a six-cent move in the Class III price calculation.
BUTTER:
The strong support in Class IV futures stems from the strength of Grade A nonfat dry milk. The spot Grade A nonfat dry milk price is at a record high with no sign of price resistance from buyers. The price has increased by 96.50 cents since Jan. 2. The May and June Class IV futures are solidly above $21.00. The price will eventually find a level of resistance at which demand destruction will take place, and end users will find alternatives.
OUTSIDE MARKETS SUMMARY:
May corn closed up 2.75 cents per bushel at $4.4300, May soybeans closed down 4.25 cents at $11.5800, and May soybean meal closed down $2.20 per ton at $329.70. May Chicago wheat closed up 9.75 cents at $5.9200. June live cattle closed up $2.90 at $251.43. May crude oil is down $7.27 per barrel at $91.81. The Dow Jones Industrial Average is up 318 points at 48,536, with the NASDAQ up 455 points at 23,639.
