MILK
It was a wild ride for Class III futures again Monday. Contracts did not move as much as they did Friday but were able to close higher Monday despite little change in the underlying cash calculation. The activity Monday was a combination of short-covering as well as speculative buying based on an article written about the possibility of a shortage of dry ice. There was no actual data for this possibility, but a correlation was made due to the increased amount of dry ice used for keeping Pfizer's COVID-19 vaccine cold. Dry ice is used during shipment for the preservation of dairy cultures for dairy product manufacturing. However, vaccine seeking approval by Moderna does not need to be as cold and may not need dry ice, rendering this concern without foundation. But the market likes sensationalism, which creates volatility. Underlying cash will be the driver of the market.
AVERAGE CLASS III PRICES
| 3 Month: | $16.46 |
| 6 Month: | $16.86 |
| 9 Month: | $17.04 |
| 12 Month: | $17.16 |
CHEESE
The block/barrel price spread seems to like to hang around that 20 cents level. Prices have diverged over the past three days, leaving the underlying cash calculation little changed. Cheese production is strong due to plentiful milk supply and increasing milk receipts. Some plants are attempting to bring production closer in line with demand but are having a difficult time. Many plants are running at capacity with extra milk for sale in the Midwest as much as $6 under class. This is not out of the ordinary so not really a surprise.
BUTTER
Butter is heading back down into the sideways trading range it has moved out of earlier. Buyers have stepped back and are now in the position to wait for lower prices again. There is no concern over supply. There are even some indications that demand is being met and inventory is beginning to build slowly. Butter output remains strong.
OUTSIDE MARKETS SUMMARY
March corn closed 0.50 cent higher at $4.24. January soybeans gained 9 cents, ending at $11.6950, with January soybean meal up $0.40, ending at $380.70 per ton. March wheat fell 18 cents, closing at $5.9650. December live cattle gained $0.35, closing at $109.10. January crude oil gained $0.42, closing at $46.99 per barrel. The Dow declined 185 points, ending at 29,862, while the NASDAQ gained 62 points, closing at 12,440.
