Market Reports

Strong domestic cheese demand propelled Class III futures to fresh life-of-contract highs this week. On Thursday, third-quarter contracts settled at an average of $21.28 per cwt., an astoundingly lofty value considering U.S. cheese production capacity and fierce competition for exports.

July through December Class III and a smattering of Class IV futures notched life-of-contract highs this week. While most Class III contracts ultimately settled a little lower than they did last Friday, Class IV futures added roughly 30ȼ.

After notching a new spring high last Friday, butter values plunged early this week. The Tuesday morning selloff was steep but ultimately short-lived. By Thursday, butter buyers were once again bidding with enthusiasm.

The markets are screaming at dairy producers to make more milk, but there are formidable barriers to expansion. Producers who have relied on extra heifers from their neighbors or the latest dispersal auction find they are increasingly scarce and expensive.

The bulls ran wild in Chicago this week. For both Class III and Class IV milk, June through December futures notched life-of-contract highs. Dairy producers are cashing a pitiful April milk check but looking forward to much more prosperous times ahead.

Milk should be plentiful and cheap, but this is not a typical year for the dairy industry. USDA reports processors bought spot milk in the Midwest at prices ranging from $1.50 under to 50ȼ over Class III. Spring premiums are atypical, and the midpoint of the range is unusually high for this time of year.