MILK
February Class III milk futures showed some significant strength early Monday, pushing price to $20.08 at one point and a new contract high. However, price slowly fell back, closing 27 cents lower at $19.43. Price was making a correction due to it outpacing underlying cash last week. The May and June contracts increased Monday as they needed to move higher due to the lag of futures last week. Stronger cheese prices will continue to provide support to futures with closer months generally being the recipients of the strength. There is great anticipation that purchasing for the Farmers to Families Food Box program will continue to increase demand with buyers coming to the spot market to purchase cheese for these boxes. A better outlook for stronger milk prices will keep production strong. Dairy cattle slaughter has really tapered off the past number of weeks as cow numbers increase. USDA will release the World Agricultural Supply and Demand report on Tuesday, which will be key to grain prices over the coming months. It will also contain estimates on milk production, milk prices and dairy product prices for this year. Milk production and milk prices are expected to be revised higher from the December estimates.
AVERAGE CLASS III PRICES
| 3 Month: | $18.34 |
| 6 Month: | $18.19 |
| 9 Month: | $18.01 |
| 12 Month: | $17.88 |
CHEESE
There were some offers for block cheese above $2 during spot trading, indicating price may move above the level over the next few days. Some sellers are holding out for higher prices in anticipation buyers will continue to be aggressive. January through November cheese exports last year dipped slightly from the same period in 2019 with a decrease of 81 metric tons. This may be a trend that we could see for a few months as cheese exports suffer due to the record-higher prices last summer. Year-to-date dry whey exports are 23.1% above the same period in 2019.
BUTTER
The butter market is bearish. Sellers continue to want to move product rather than take the chance to hold for higher prices later. There is just too much butter available, and demand from the food service industry is not going to change anytime soon. January through November 2020 butter exports declined 1.8% compared to the same period in 2019. This does not bode well for butter demand both domestically and internationally for the foreseeable future.
OUTSIDE MARKETS SUMMARY
March corn declined 4 cents, closing at $4.9225. January soybeans declined 1.25 cents, ending at $13.7450, with January soybean meal gaining $7, closing at $451.80 per ton. March wheat declined 4 cents, closing at $6.3475. February live cattle fell $1.07, closing at $113.40. February crude oil gained a penny, ending at $52.25 per barrel. The Dow lost 89 points, closing at 31,009, while the NASDAQ fell 166 points, ending at 13,036.
