Monday Morning Dairy Market Update - Price Movement May Be Limited Ahead of Spot Trading

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	Mixed
Soybean Futures:	4 to 6 Lower
Soybean Meal Futures:	Mixed
Wheat Futures:	1 to 3 Higher

MILK:

Class III milk futures closed higher last week despite the substantial decline of spot cheese prices. Cheese prices will need to stabilize or increase, or milk futures will come under significant pressure. Futures will not move in the opposite direction as cash for very long without a price correction. There has been limited fundamental news to provide long-term support for milk futures. Milk production remains strong, and it is expected to remain that way for some time. Although the culling of dairy cattle has increased, it may be limited due to continued strong prices for calves.

CHEESE:

The block cheese price fell to the lowest level since July 6, 2023, on Friday. If the price is unable to find support and falls another 7 cents, it would be back to the levels of May 2021. Prices not finding support at the current levels at this time of year does make this a possibility.

BUTTER:

The improvement in butter demand has provided some support to the market. However, that demand may be temporarily supported by holiday buying. It certainly would be positive if demand were maintained due to low prices keeping consumers buying.

Friday Closing Dairy Market Update - Class III Milk Futures Close Higher for the Week

GENERAL OVERVIEW:

Cheese prices were lower, but Class III futures held up well. Traders seem to have a sense that the market may find a bottom soon, even though it has yet to find that bottom. After four weeks of trading, spot barrels finally have a load traded.

MILK:

Surprisingly, Class III futures closed higher for the week despite a significant decline in spot cheese prices. It seemed that traders might have turned less bearish on the market, feeling that cheese prices are nearing the lows. The weakness of milk futures has been depressing, as it appears milk prices in December may be significantly lower than they were in November. The only consolation we can take is that low prices will cure low prices. However, the duration of the low prices can extend for a significant amount of time. Concern has developed recently over the weakness seen in the cattle market and the impact on calf prices. However, the impact may be short-lived as cattle prices have rebounded over the past eight days. Calf prices should remain strong as long as cattle supplies remain tight.

AVERAGE CLASS III PRICES:

3 Month:	$15.61
6 Month:	$15.91
9 Month:	$16.31
12 Month:	$16.60

CHEESE:

For the week, the block cheese price fell 9.00 cents with 34 loads traded. The barrel cheese price fell 17.00 cents with one load traded. This was the first load traded over the past four weeks. Despite the weakness of cheese, Class III futures closed higher for the week. Traders seem to be reducing some of the bearishness they have been carrying for quite some time. The thinking may be that the market has limited downside from here. The dry why price increased 1.25 cents this week, with four loads traded.

BUTTER:

For the week, butter increased 2.75 cents with 25 loads traded. Grade A nonfat dry milk increased 2.75 cents with 14 loads traded. Butter futures close higher for the week, but traders showed little conviction that the price has much upside potential.

OUTSIDE MARKETS SUMMARY:

March corn closed down 2.50 cents per bushel at $4.4475, January soybeans closed down 14.25 cents at $11.0525 and January soybean meal closed down $3.80 per ton at $307.40. March Chicago wheat closed down 4.50 cents at $5.3575. February live cattle closed up $3.15 at $227.15. January crude oil is up $0.41 per barrel at $60.08. The Dow Jones Industrial Average is up 104 points at 47,955, with the NASDAQ up 73 points at 23,578.

Friday Midday Dairy Market Summary - Cheese Moves to New Lows

OUTSIDE MARKETS SUMMARY:

CORN:	1 Lower
SOYBEANS:	13 Lower
SOYBEAN MEAL:	$3.50 Lower
LIVE CATTLE:	$5.75 Higher
DOW JONES:	163 Points Higher
NASDAQ:	55 Points Higher
CRUDE OIL:	$0.36 Higher

MIDDAY MARKET UPDATE:

The block cheese price declined 1.50 cents, closing at $1.38 with 10 loads traded. The barrel cheese price declined 3.25 cents, closing at $1.4125 with one load traded. This is the first load traded over the course of four weeks. The dry whey price held steady at 74.50 cents with one load traded. Class III futures reversed course with most contracts showing losses. Futures are 23 cents lower to 15 cents higher with double-digit gains showing in the fourth quarter 2026 contracts. The butter price increased 0.75 cent to close at $1.4750 with 10 loads traded. Grade A nonfat dry milk increased 0.50 cent to close at $1.17 with no loads traded. Class IV has only traded in the August contract at an unchanged price. Butter futures are 0.22 to 1.50 cents lower. Dry whey futures are 0.75 to 1.22 cents lower. Cheese futures are 0.50 to 1.90 cents lower.