MILK
Milk futures were mixed again Wednesday despite another moderate rise of spot cheese prices. The market is adjusting to where it should be in relation to underlying cash after the exuberance of last week. Front-month January has declined the past four days even though cheese prices have increased. This may not be out of line as price jumped substantially last week Tuesday and Wednesday on emotion and is now correcting to get in line with underlying cash. Much of the rally in January likely should not have happened based on what is taking place now. The December Federal Order prices were announced with Class II at $14.01, up $0.15 from November. Class III price was $15.72, a decline of $7.62. Class IV price was $13.36, an increase of $0.06 from November. USDA released the November Agricultural Prices report. Income over feed for the month was $11.87 compared to $11.13 for October. Corn and soybean meal prices were higher, but so was the all-milk price. The average price for corn was $3.79, an increase of $0.04 from October. The central Illinois soybean meal price was $387.83, an increase of $20.72 per ton. The alfalfa hay price declined $4 per ton to an average of $167. Supreme/premium quality hay gained $6 per ton to an average of $200 per ton. The blended hay price used in the income over feed calculation was $183.50 per ton.
AVERAGE CLASS III PRICES
| 3 Month: | $17.25 |
| 6 Month: | $17.36 |
| 9 Month: | $17.38 |
| 12 Month: | $17.34 |
CHEESE
Many cheese plants are reportedly running on full schedules. More milk will again be available. Spot milk will be available over the next few days at discounts larger than they had been over Christmas. There are many questions concerning the impact of an increase of government purchases due to the stimulus bill. This will keep traders guessing as to market direction until more definite information is released. Cheese inventories are reported to have increased during December, but this is not a concern to the market at present.
BUTTER
Churning is expected to be very active for the foreseeable future. Heavy cream supplies and reasonable prices for that cream are keeping churning busy. Demand is being met with extra moving to inventory. There is little effort to reduce churning in order to limit production to demand. Increased food service demand will not return anytime soon.
OUTSIDE MARKETS SUMMARY
March corn jumped 8.50 cents, closing at $4.7450. January soybeans gained 8.25 cents, closing at $13.0375, with January soybean meal gained $5.40 per ton, closing at $432.40. March wheat jumped 22.25 cents, closing at $6.4075. February live cattle declined $0.12, ending at $114.45. February crude oil gained $0.40, closing at $48.40 per barrel. The Dow gained 74 points, closing at 30,410, while the NASDAQ gained 20 points, closing at 12,870.
