Editor’s note: This market commentary is provided by the Dairy Division at FCStone/Downes-O'Neill in Chicago, Ill.

Announced pricing from last week saw the Class III price in April announced at $16.87, a decrease of $2.53 from March. The milk-feed ratio was 1.84, the lowest since August of 2009. The all-milk price was $19.70, a decrease of 70 cents from March. Income-over feed costs were 8.99, a decrease of 1.88 from March. Yet, many dairy producers are still making money. Rising input costs are what leave producers scared today. $6.40 a bushel corn and so on.

With inputs like those, a high milk price is needed. And, right now, milk prices are just high enough to prevent MILC payments.

On the week, prices rallied; Class III saw May-June go up 29 cents to $16.87 and the July-Dec pack gained 24 cents to close at $17.65.

Cash-settled cheese traded 22 times and prices were modestly mixed -- not exactly moving in tandem with Class III. Word on the street is that we might see several weeks of softness before resumption in buy side demand. But others are thinking that high prices hitting consumers might hamper price gains in the 2nd half of the year.

We expect Class III to open mixed.

Friday’s session saw yet another amazing move in grain futures. Corn closed up 27.25 to $7.56 1/2 in July, while new crop was up 32 to $6.69 1/2 with expanded limits following the limit losses Thursday. Soybeans climbed $40.5 cents to $13.94 with wheat up $23.75 to $801.25 and soybean meal up $9.4/ton to $363.6.

Weather markets are volatile and nearly impossible to predict, but the fundamentals of strong demand and a softening dollar, combined with tight stocks, are underpinning the market currently. But we should not forget that timeless quip – “April Showers bring May Flowers”.  The bullish undertone could come under assault as the weather historically dries up in May and will free up the ambitious and ready U.S. Farmer to plant what could be a record crop. 

We look for corn to open 5 to 7 cents lower and beans to open 5 to 7 lower.

Daily CME spot market prices:

Block Cheese $1.6125 (up 0.75 cents)

Barrel Cheese $1.6025 (up 1.25 cents)

Butter $2.075 (up 2.5 cents)

Grade A NFDM: $1.645 (up 2.25 cents)

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Source:  FCStone/Downes-O'Neill