EVEN WITH AMPLE INVENTORIES, BUTTER has been performing extremely well, nearly hitting $3 per pound in early April, the highest levels recorded since early November 2023 when prices were retreating from the record highs documented in October.

BUTTER INVENTORIES IN FEBRUARY WERE UP almost 2 million pounds from the same month in 2023, and a jump of 48.2 million pounds between January and February of this year was one of the biggest inventory increases between months in the past five years.

ONE WOULD EXPECT THIS MUCH BUTTER IN STORAGE, when combined with strong production and reduced exports, would pull down prices, but domestic demand has been robust. And, with high butter prices forecast for the next several months, buyers of butter appear to be adding to their inventories now to avoid higher prices later.

WHILE BUTTER EXPORTS WERE DOWN YEAR OVER YEAR in February, overall dairy exports bested year-ago levels for the first time in a year. U.S. dairy exports totaled 501.1 million pounds, up 5.5% from last year and the first time February exports surpassed 500 million pounds.

CHEESE WAS THE EXPORT LEADER, WITH SHIPMENTS climbing to 95.6 million pounds, which was 27.3% higher than last February. A record 36.6 million pounds of cheese were shipped to Mexico.

FARMERS INTEND TO PLANT FEWER ACRES TO CORN this growing season, according to USDA’s Prospective Plantings report. Farmers expect to plant 90 million acres to corn, down 5% from last year. Acres planned for corn was down or unchanged from 2023 in 38 of the 48 surveyed states, including Iowa, where if prospective plantings come to fruition, it would be the fewest corn acres planted in the state since 2006.

MEANWHILE, ACRES PLANTED TO SOYBEANS are expected to be 3% higher than in 2023, with farmers intending to plant 86.5 million acres.

DROUGHT CONDITIONS REMAIN A CONCERN in some parts of the country as we head into the growing season. This could put pressure on hay supplies, which are at historical lows.

ALTHOUGH IT HAS BEEN A WET WINTER AND EARLY SPRING for some areas, extreme drought conditions remain in New Mexico and Iowa, according to the National Oceanic and Atmospheric Administration.

THE FEBRUARY MARGIN FOR THE DAIRY MARGIN COVERAGE (DMC) program rose by 96 cents per hundredweight (cwt.) from a month earlier to reach $9.44 per cwt. This triggered a payment of 6 cents per cwt. for producers signed up at the $9.50 per cwt. coverage level.

DMC MARGINS APPEAR TO REMAIN MOSTLY ABOVE THE $9.50 per cwt. coverage level for the rest of the year based on futures-based forecasts, with potential dips in late spring. Enrollment ends April 29.

THIS YEAR BEGAN WITH THE SMALLEST U.S. BEEF CATTLE herd since 1951. This creates an opportunity for dairy producers, particularly those breeding with beef sires. Sales of dairy calves and cull cows represented $1 per cwt. of milk production in 2019. In the first quarter of this year, that number is $2.76. Read more on page 206.

WITH AN APRIL 1 DEADLINE FOR POST-HEARING BRIEFS, USDA now has until June 30 to publish a recommended decision on the federal milk marketing order modernization process. Once published, there will be a time period for additional comments to be filed before USDA issues its final plan that will then be voted on by stakeholders.