Friday Closing Dairy Market Update - Milk Futures Close Strong

GENERAL OVERVIEW:

Milk futures closed substantially higher. This was unexplained for Class III futures as spot cheese prices declined. However, the strength was warranted in Class IV futures because the spot butter price jumped. It is uncertain whether the income over feed price will trigger a DMC payment.

MILK:

It was a strong end to the week and month for milk futures. The strength in Class III futures was not expected due to the weakness of spot cheese prices. However, the strength in Class IV futures was not surprising due to the strength in butter and nonfat dry milk. The nonfat dry milk price increased substantially this week, lending quite a bit of support to milk futures.

The December Agricultural Prices report was released today. It is uncertain whether the price movement between the All-milk price and feed prices is sufficient to trigger a Dairy Margin Coverage payment. The average corn price was $4.10 per bushel, up $0.12 from November. This is $0.13 lower than December 2024. The Premium/Supreme hay price was $211.00 per ton, down $5.00 per ton from November and down $19.00 per ton from a year ago. The All-milk price was $19.00 per cwt, down $0.70 from November and down $4.30 from a year ago. The average soybean meal price will be released on Monday by the FSA. Other prices to take note of, but are not used in the calculation, are the alfalfa hay price, which was $161.00 per ton, up $2.00 per ton from a year ago, but down $3.00 per ton from November 2024. The average soybean price was $10.40 per bushel, down $0.10 per bushel from November but up $0.61 from December 2024.

AVERAGE CLASS III PRICES:

3 Month:	$15.55
6 Month:	$16.40
9 Month:	$16.88
12 Month:	$17.10

CHEESE:

For the week, blocks increased 0.75 cent with 20 loads traded. The weekly average price is $1.3940. Barrels increased 3.00 cents with two loads traded. The weekly average price is $1.4280. Dry whey increased 1.50 cents with five loads traded. The weekly average price is 74.50 cents.

BUTTER:

For the week, butter increased 0.50 cent with 39 loads traded. The weekly average price is $1.55470. There was much volatility during the week, but not much price change for the week. Grade A nonfat dry milk jumped 13.50 cents with four loads traded. The weekly average price is $1.3895. This may be the largest price increase ever seen over the period of one week. This strength added a lot of support to Class IV futures.

OUTSIDE MARKETS SUMMARY:

March corn closed down 2.50 cents per bushel at $4.2825, March soybeans closed down 8.00 cents at $10.6425, and March soybean meal closed down $2.40 per ton at $293.60. March Chicago wheat closed down 3.50 cents at $5.3800. April live cattle closed down $0.48 at $236.80. March crude oil is down $0.21 per barrel at $65.21. The Dow Jones Industrial Average is down 189 points at 48,892, with the NASDAQ down 223 points at 23,462.

Friday Midday Dairy Market Summary - Butter Price Jumps

OUTSIDE MARKETS SUMMARY:

CORN:	5 Lower
SOYBEANS:	10 Lower
SOYBEAN MEAL:	$3.60 Lower
LIVE CATTLE:	$0.10 Higher
DOW JONES:	437 Points Lower
NASDAQ:	264 Points Lower
CRUDE OIL:	$0.95 Lower

MIDDAY MARKET UPDATE:

The block cheese price declined 1.25 cents, closing at $1.3635 with seven loads traded. The barrel cheese price declined 2.00 cents, closing at $1.39 with no loads traded. The dry whey price increased 0.50 cent, closing at 75.00 cents with one load traded. Class III futures are 1 cent lower to 48 cents higher. The nearby January contract shows the only loss. That is due to there only being two days remaining to trade the contract, and it is basically priced. The big move for the day was in butter, with the price gaining 9.50 cents, closing at $1.58 with one load traded. There were 12 unfilled bids and two uncovered offers remaining at the close. Grade A nonfat dry milk gained 4.25 cents to close at $1.46 with one load traded. Class IV futures are 30-75 cents higher. Butter futures are 2.77-7.00 cents higher. Dry whey futures are 0.75-3.50 cents higher. Cheese futures are steady to 2.70 cents higher. The December Agricultural Prices report will be released today.

Friday Morning Dairy Market Update - Trading Volatility Settles Down

OPENING CALLS:

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

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	2 to 3 Lower
Soybean Futures:	5 to 6 Lower
Soybean Meal Futures:	$0.50 to $1 Lower
Wheat Futures:	Mixed

MILK:

Milk futures will wait for direction from the spot market before developing a direction. The substantial volatility early in the week has subsided, with futures more in line with the underlying cash. Traders realized that the strong increase in spot butter and cheese prices was not a true fundamental picture of the market, but rather the result of an unexplained frenzy that I term the "heifer mentality". Dairy farmers can relate to this as they have all seen heifers or any cattle for that matter, become frightened due to one or a few animals beginning to run in a direction. This generates a panic through the herd, triggering a fright, flight response. After running around for a short period of time, the animals stop and look around, wondering why they ran in the first place. This is a correlation to what took place earlier in the week. The fundamentals did not support the strength. The December Agricultural Price report will be released today, providing most of the prices used to calculate income over feed.

CHEESE:

Hopefully, cheese prices will find support and hold. The unfilled bids remaining at the close of spot trading on Thursday would suggest this is a level at which buyers may be more aggressive.

BUTTER:

The butter price has yet to find support. Butter futures were higher at the close as they corrected from being oversold relative to cash. Strong butter production, but lower inventory indicates strong demand. The price may find support near the current level.