Monday Closing Dairy Market Update - Class III Milk Futures Move Higher

MILK

Class III milk futures moved significantly higher due to the strength of underlying cash. This moved July through October futures deeper into the $20.00 price range. New contract highs were again seen in August and late contracts. Interestingly, Class III futures are higher than when cheese prices were significantly higher. Traders have become more bullish for the longer term. Class IV futures continue to hold back from following the butter price. It was anticipated futures would move strongly higher if the butter price increased further, but that has not been the case. The July contract showed the greatest gain with only a few contract months traded. Most futures contracts closed unchanged.

The April average soybean meal price was released at $357.68 per ton. This is $4.49 per ton lower than March and $99.57 per ton lower than April 2023. The April income over feed price was $9.60 per cwt. There will be no Dairy Margin Coverage program payment for the month. Tuesday is the final trading day for April dairy futures and options with the Federal Order prices to be announced on Wednesday.

AVERAGE CLASS III PRICES

3 Month:	$19.69
6 Month:	$20.15
9 Month:	$19.85
12 Month:	$19.57

CHEESE

Cheese prices increased but remain significantly below the highs of a few weeks ago. There is a possibility prices could move back to those levels over time. Cheese demand is improving but will need to increase further to keep inventory from increasing. More milk is moving to manufacturing increasing the amount of cheese available for demand. Milk components are holding well and at levels higher than a year ago. This increases cheese yields.

BUTTER

The butter price is back to the level it was on May 24 and is the highest price this year. The price movement back to this level may generate further buying interest as buyers want to purchase before prices increase. This may generate increased buying interest and higher prices.

OUTSIDE MARKETS SUMMARY

July corn closed down 2.75 cents per bushel at $4.4350, July soybeans closed down 20.50 cents at $11.8450 and July soybean meal closed down $5.20 per ton at $359.50. July Chicago wheat closed down 5.75 cents at $6.7275. August live cattle closed up $0.43 at $178.88. July crude oil is down $2.77 per barrel at $74.22. The Dow Jones Industrial Average is down 115 points at 38,571 with the NASDAQ up 94 points at 16,829.

Monday Midday Dairy Market Summary - Block Cheese Jumps

OUTSIDE MARKETS SUMMARY:

CORN:	5 Lower
SOYBEANS:	22 Lower
SOYBEAN MEAL:	$2.90 Lower
LIVE CATTLE:	$0.32 Higher
DOW JONES:	319 Points Lower
NASDAQ:	4 Points Higher
CRUDE OIL:	$2.84 Lower

MIDDAY MARKET UPDATE:

Block cheese price increased 8 cents, closing the spot trading period at $1.89 with one load traded. The barrel cheese price increased 2 cents, closing at $1.96 with two loads traded. The dry whey price increased 0.50 cents, closing at 42 cents with no loads traded. This strength turned Class III futures higher in contracts through November. Class III futures are mixed throughout ranging from 8 cents lower to 32 cents higher. The butter price increased 3 cents, closing at $3.12 with two loads traded. This eliminated the decline experienced early last week. The grade A nonfat dry milk price remained unchanged at $1.1675 with no loads traded. Class IV futures have not yet been traded. Butter futures are 1.50-6.00 cents higher. Dry whey futures are 0.12 lower to 0.60 cent higher.

Monday Morning Dairy Market Update - Limited Trade Expected Ahead of Cash

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	4 to 10 Higher
Butter Futures:	Steady to 1 Higher

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 2 Lower
Soybean Futures:	8 to 10 Lower
Soybean Meal Futures:	$2 to $3 Lower
Wheat Futures:	7 to 10 Higher

MILK:

Milk futures are expected to trade mixed ahead of spot trading. If there is a minor increase in cheese prices, Class III futures may show little change as higher prices are already factored in. If butter price increases, Class IV futures could show strong gains as contacts held back last week even though butter price jumped. The FSA did release the average soybean meal price for April at $357.68. This puts income over feed at $9.60. The result is no Dairy Margin Coverage payment for the month. The current milk futures prices and gain market fundamentals indicate there may not be any further income over feed prices low enough to trigger DMC payments for the rest of the year.

CHEESE:

Cheese prices are supported but may not have sufficient buying interest to show continued price strength. Surprisingly, the block/barrel spread remains inverted by a significant amount. Cheese demand is showing signs of improving.

BUTTER:

The buying interest in butter during the past two days may continue. The sharp decline seems to have been a short-lived reaction to the cold storage report. Price weakness will be viewed as a buying opportunity. Cream supply is expected to tighten in the coming weeks.