Cash Markets Continue to Show Strength

The cash cheese markets continued to show strength this week.

“It seems like sellers have stepped away and inventories are not overly burdensome even though they are still growing,” FC Stone dairy economist Bill Brooks said this week. He anticipates sellers coming back once cheese hits in the mid $1.70’s.

Cash butter had been trading within the range that we’ve seen, and recently broke through $2.12 that we had back in March.

Last week’s release of the April Milk Production report, up 1.5 percent, was a little weaker than what Brooks was looking for. He said it was driven by a little bit lower milk per cow, but cow numbers didn’t grow by quite as much either.

“Not unexpected to see a slowdown in that percentage gain as we are starting to catch up with some pretty strong gains that we recorded last year,” he said. April 2010 was the first gain that we had last year, up 1.7 percent.

While April’s milk production was not a big surprise, Brooks said it adds a little bit of nervousness to where milk supplies potentially could go later this year.

“Although with cow numbers growing they know the animals are there,” he said. “It’s just are we going to be able to get the quantity and quality of feedstuffs into them to help them maximize their potential.”

April’s Cold Storage report was not overly bullish according to Brooks. Cheese stocks grew, but not quite as much as what he was expecting. April Butter stocks actually showed a decline, the first time in April since 2004.

“During that year, we saw prices decline after they peaked out actually in the month of April. Right now it doesn’t look like we are going to see a steady decline in prices given what’s going on in our butter market currently and the fact that we have a little bit lower stock levels,” Brooks said.