Friday Midday Dairy Market Summary - Cheese Moves Lower While Butter Gains

OUTSIDE MARKETS SUMMARY:

CORN:	6 Higher
SOYBEANS:	9 Lower
SOYBEAN MEAL:	$6.40 Lower
LIVE CATTLE:	$0.25 Lower
DOW JONES:	181 Points Lower
NASDAQ:	190 Points Lower
CRUDE OIL:	$0.71 Lower

MIDDAY MARKET UPDATE:

Block cheese price declined 3.75 cents, closing at $1.8075 with no loads traded. Buyers did not show up in the market again Friday. Barrel price declined 0.50 cent closing at $1.8125 with two loads traded. The block/barrel spread is again inverted but by only 0.50 cent. Dry whey price remained unchanged at 80 cents with no loads traded. Class III futures are 25 cents lower to 10 cents higher. February shows the greatest loss while October shows the greatest gain. Butter price increased 3.50 cents, closing at $2.9350 with 10 loads traded. Grade A nonfat dry milk price increased 0.50 cent closing at $1.8150 with three loads traded. Class IV futures are 25 cents lower to 44 cents higher. Butter futures are 2 cents lower to 9.47 cents higher. Dry whey futures are 0.50 cent lower to 1.50 cents higher.

Friday Morning Dairy Market Update - Mixed Dairy Activity Ahead of Spot Trading

 OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	Steady to 1 Higher

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 3 Lower
Soybean Futures:	3 to 5 Lower
Soybean Meal Futures:	$3 to $4 Lower
Wheat Futures:	4 to 6 Lower

MILK:

Class III milk futures have retraced significantly this week following the weakness of cheese. Buyers of cheese have purchased sufficient supply for now and do not need to be as aggressive. Traders liquidated some of their long positions as cheese prices slipped. Milk production is steady with some areas indicating production has increased slightly. There is greater demand for cows as some farms want to fill up stalls again. Due to a tighter heifer market, they are looking for cows from other farms and at sale barns. This in not going to flood the market anytime soon, but it is signaling a change in attitude. Mixed futures prices are expected prior to spot trading.

CHEESE:

It is unclear just how far cheese prices will weaken before buyers view it as a buying opportunity. It may be too early for aggressive buying for second quarter expected demand, leaving buyers purchasing on an as-needed basis for the time being. Dry whey price made a new record high Thursday. The last time price moved near this level, demand was impacted and price fell back steadily for an extended period of time. The market is different than it was in 2007, which could keep price higher as demand is more diverse. However, high price and inflation may impact the market.

BUTTER:

Price looks like it will test the $3.00 level with renewed buying interest. World price and demand is strong, but U.S. price is now above world price. Traders are still not convinced butter price will hold as they continue to hold a substantial discount to cash. Churning is increasing, which may slowly increase supply.

Thursday Closing Dairy Market Update - February Class I Price Reaches $21.64

MILK:

It has been a wild ride for Class III futures this week. New contract highs were made a week ago, only to fall back to price levels last seen at the beginning of the year. The fear factor over milk supply pushed prices higher only to run its course with the concern over tight supply ebbing a bit. This does not mean milk prices and underlying cash prices are going to fall apart, but the market has reality setting in again for the time being. The market is trying to balance supply with demand. With the indication of some slowing of cheese demand and some expansion of cow numbers again, there is a little less fear over milk supply. Now, the increase of cow numbers may not be very evident over the next few months, as cows might change farms, keeping the same numbers in the nation's dairy herd. The reality may be that cow number will stop declining initially before possibly increasing again. The February Class I price is $21.64. This is an increase of $1.93 from January and an increase of $6.10 from February 2021.

AVERAGE CLASS III PRICES:

3 Month:	$20.93
6 Month:	$21.07
9 Month:	$20.97
12 Month:	$20.75

CHEESE:

Food service demand has slowed somewhat due to the surge of COVID cases, but the rise in cases seems to be settling down as the infections may now be over the hump. This might result in increased demand from the restaurants and meeting venues. Retail sales are good but showing signs of slowing as buyers are comfortable with current supplies for the time being. Delivery of cheese continues to face delays, which is the reason orders are being placed significantly ahead of time in order to assure product availability when desired.

BUTTER:

Price keeps reaching higher as butter supply is in a different position than cheese. USDA will release the December Cold Storage report on Monday, which is expected to show supply at the end of the year substantially lower than the previous year. Churning activity is increasing to some extent as more cream is available. Buyer resistance still has not been reached as bulk butter supply remains tight.

OUTSIDE MARKETS SUMMARY:

March corn gained 0.50 cent, ending at $6.11. March soybeans jumped 34.50 cents, closing at $14.2575, with March soybean meal up $2.50 per ton, closing at $400.80. March wheat declined 6.25 cents, ending at $7.9025. February live cattle slipped $0.22, closing at $138.32. March crude oil declined $0.25, ending at $85.55 per barrel. The Dow declined 313 points, closing at 34,715, while the NASDAQ declined 186 points, closing at 14,154.