MILK
Class III milk futures extended the losses that were seen on the last trading day of 2020. Greater pressure was seen Monday due to the decline of cheese prices. This caught some traders off guard as the anticipation was for cheese to follow the pattern of last week and continue higher. Although all months came under selling pressure, later months were able to hold well, showing minor losses. Futures from February through December remain above $17. There is concern of heavy milk supplies potentially overwhelming the market as many milk plants are running at capacity and milk production continues to increase. It is a slower-demand time of year, which may have a significant impact on milk prices. Traders are not very apt to buy into the market very quickly now that cheese prices have fallen back. The market will need to prove itself.
AVERAGE CLASS III PRICES
| 3 Month: | $16.61 |
| 6 Month: | $16.92 |
| 9 Month: | $17.07 |
| 12 Month: | $17.11 |
CHEESE
The decline of cheese prices sent a warning shot over the bow. It may indicate that supply is expected to be larger than demand for the near term. It is unclear just what the stimulus bill will do for dairy demand in and of itself. There is money appropriated for food programs, but it doesn't specifically indicate how much would be for dairy products. The proof will be when USDA puts out solicitations and if demand increases overall. Strong milk production will increase cheese production and likely begin to increase inventory. Buyers have been active but are buying without being very aggressive.
BUTTER
Price moved to the lowest level since Nov. 30. This does not bode well for price outlook as inventory has finished the year substantially higher than last year with reports indicating stocks are already building from the previous month. Retail outlets are assessing product movement over the holidays and will be replenishing depleted supply. Any price increase is expected to be short lived.
OUTSIDE MARKETS SUMMARY
March corn slipped 0.25 cent, closing at $4.8375. January soybeans gained 1.25 cents, closing at $13.1650, with January soybean meal down $7.20 per ton, closing at $427.20. March wheat gained 1.50 cents, ending at $6.42. February live cattle fell $2.72, ending at $112.30. February crude oil fell $0.90, closing at $47.62 per barrel. The Dow lost 383 points, ending at 30,224, while the NASDAQ fell 190, closing at 12,698.
