Dairy markets continue to disappoint. While cash cheese prices have been hanging around the $1.50 range, Class III futures have been sliding. On Monday, March through December 2010 contracts lost anywhere from 30 to 62 cents. February through June are now all below $14.00. There are a number of factors weighing-in, a 13 percent increase in cold storage stocks in 2009, lower feed prices, a stronger dollar and 4.5 million replacement heifers in the country as of the end of December. Jacquie Voeks with Stewart-Peterson says traders are just a bit nervous these days, “Traders have been burned so many times taking a chance that they’re just not too sure they want to do that at this point in time.” She says even though we have reduced cow numbers, we have improved efficiencies and “until they really see something that says we are not going to continue to produce more milk, we’re going to struggle.”
Voeks says some believe cash cheese is going to move up to $1.60 and others think it will slip to $1.30 so the best thing a producer can do is prepare for either move. “Be protective and be proactive,” says Voeks, with August through December still above $15.00 she suggests producers use puts to establish a floor and for the near-month contracts, move on any bounce. “We should be thinking about what am I going to do if it goes up and what am I going to do if it goes down.”
AUDIO: Jacquie Voeks talks about the dairy market situation
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