Market News

Class III futures keep pushing higher

No changes in the cash prices on the Chicago Mercantile Exchange on Thursday but solid gains in the Class III futures.  The May contract increased 27 cents, June added 52 cents, July increased 40 cents.

Eric Meyer with HighGround Dairy says they are “befuddled” by what is happening in the dairy markets.  Cash cheese has been holding steady but Class III futures have been pushing higher presumably on strength in the butter market.  Then, along comes the March Cold Storage report with American-type cheese inventories down 2 percent from February.  The 12.8 million-pound decline is the largest since 1992.  It also put stocks below year-ago levels for the first time in five months.  Meyer questions the numbers given strong milk production, increased American cheese production and exports down more than 50 percent for the first two months of the year.

Support also from the March milk production report which shows a 1.2 percent increase in total milk production compared to a year ago.  That is the smallest increase of the year, in fact the smallest increase since March of last year.

Meyer says if the cold storage data is correct, the Class III futures run-up is justified and higher cash cheese prices should be on the way.

National Ag Statistics Service reports 260,700 dairy cows were sent to slaughter in March, 18,000 more than in February and 15,000 more than sent in March of last year.  For the January-through-March quarter, dairy cow slaughter totaled 778,400 head, 26,000 more than sent to slaughter in the first quarter of 2014.

Dairy cow slaughter for the week ending April 4 was 56,800 compared to 55,900 the same week a year ago.

Read the complete HighGround analysis here: