GENERAL OVERVIEW:
Class III futures were mixed, but mostly higher. Class IV futures showed substantial gains due to the continued strength of nonfat dry milk. USDA will release the March Milk Production report on Wednesday.
MILK:
Class III milk futures were moderately higher, with the May and June contracts showing the most gains. A few contracts showed minor losses, but the gain in the block cheese price provided support. Class IV futures showed strong gains with June moving above $22.00 and July over $21.00 during the day. The continued strength in nonfat dry milk is providing substantial support to futures. There will be a point at which demand will slow, and the nonfat dry milk prices will reach a threshold, but it is uncertain as to what level that will be. USDA will release the March Milk Production report on Wednesday. I estimate milk output to be up 2.7% from March 2025, with cow numbers up 5,000 head from February.
AVERAGE CLASS III PRICES:
| 3 Month: | $17.35 |
| 6 Month: | $18.05 |
| 9 Month: | $18.23 |
| 12 Month: | $18.08 |
CHEESE:
Even though the block cheese price provided support to the market, futures are moving no better than sideways. Increasing milk production is providing sufficient milk for demand. Cheese output is heavy, but plants have the capacity to handle the extra milk. This important aspect is whether demand will continue to absorb the extra cheese being produced. The March Cold Storage report will be released on Friday, indicating whether demand is keeping up with supply.
BUTTER:
The butter price remains in a downtrend, with price increases being followed by a lower price. Butter inventory is below a year ago, but the market is focused on the continued supply being offered to the market. There have already been 58 loads of butter traded on the spot market this week.
OUTSIDE MARKETS SUMMARY:
May corn closed up 1.75 cents per bushel at $4.5375, May soybeans closed up 8.75 cents at $11.7450, and July soybean meal closed steady at $321.20. July Chicago wheat closed up 6.75 cents at $6.1275. June live cattle closed down $2.53 at $243.55. June crude oil is up $2.93 per barrel at $90.35. The Dow Jones Industrial Average is down 293 points at 49,149, with the NASDAQ down 144 points at 24,260.
