MILK
Class III futures took another hit Monday after making a relief bounce on Friday. Traders may have anticipated some bearish reports Monday and decided to either liquidate positions or to get some sold positions on the books. The anticipation of a bearish milk production report was correct. December milk production in the top 24 states increased 3.2% from December 2019. This is the second-highest gain for the year. The revision in November added another 0.3% or 56 million pounds to the total, pushing November's milk production up 3.5%. Production totaled 18.1 billion pounds in December. Production per cow reached 2,027 pounds, which is 40 pounds above December 2019. Cow numbers reached 8.92 million head, an increase of 107,000 head more than December 2019 and 12,000 more than November. Milk production in the 50 states increased 3.1% to 18.9 billion pounds for the month. Milk production per cow totaled 2,006 pounds, up 40 pounds from a year ago. Cow numbers increased 12,000 head from the previous month and are 100,000 head from a year ago, totaling 9.443 million head. This is a 20-year record high for cow numbers. This is a bearish production report and one that will have substantial implications for dairy processors as we move closer to spring flush. Milk futures may remain under pressure as there will be little reason for buyers to be concerned over supply.
Average Class III Prices
| 3 Month: | $16.39 |
| 6 Month: | $16.88 |
| 9 Month: | $17.14 |
| 12 Month: | $17.23 |
CHEESE
The December Cold Storage was bearish as cheese inventory increased in all categories except Swiss cheese. Swiss stocks declined 215,000 pounds and is 18% lower than a year ago. American cheese inventory increased 39.2 million pounds from November or 5% from November. The concern is that inventory is now 7% above a year ago. In November, American cheese inventory was 3% above the previous year. This indicates inventory is growing rapidly. Other cheese inventory gained 12.2 million pounds, moving stocks to 5% above a year earlier. Total cheese inventory now stands at 1.398 billion pounds. This was an increase of 51.1 million pounds from November and 6% above December 2019.
BUTTER
Butter inventory grows increasingly bearish by the month. December inventory totaled 808.2 million pounds, an increase of 22.0 million pounds or 9% from November. Inventory is now 44.0% above December 2019. This will not be supportive to price anytime soon.
OUTSIDE MARKETS SUMMARY
March corn jumped 11 cents, closing at $5.1150. March soybeans jumped 31.75 cents, closing at $13.4350, with March soybean meal up $8.00 per ton, closing at $429.60. March wheat jumped 14 cents, ending at $6.4850. February live cattle slipped $0.20, closing at $116.52. March crude oil gained $0.50, ending at $52.77 per barrel. The Dow declined 37 points, closing at 30,960, while the NASDAQ gained 93 points, closing at 13,636.
