Milk:
Milk futures were moderately higher as traders adjusted positions to what they determined was a good level compared to underlying cash. However, after the CME settled futures for the day, some very strong buying erupted, sending February and March Class III futures limit up for a brief period. They did not remain there and fell back quickly, but remain quite a bit higher than where they closed. Class IV futures also gained with contracts trading as much as 36 cents higher. There has been no announcement by USDA about any new program or dairy aid. However, this seems to be tied to President-elect Joe Biden unveiling a new stimulus program Thursday evening with a price tag of $1.9 trillion. Traders might be jumping ahead, trying to get in on the bottom of stronger prices as possibly more money could be appropriated for more food aid. The interesting aspect of this is there is already a fifth round of the Food Box program taking place through the end of April. It will take some time for another stimulus to be implemented as it needs to work through Congress. Thus, it may not impact closer-month milk futures. There is also a chance that this stimulus would be paired down as Congress may not agree on this amount. Other than that, there seems to have been nothing to prompt the strong gains during the last two hours of trading. It will be interesting to see how far this might carry through if not supported by cheese.
Average Class III Prices:
| 3 Month: | $17.92 |
| 6 Month: | $17.91 |
| 9 Month: | $17.81 |
| 12 Month: | $17.72 |
Cheese:
The weakness of cheese the past few days has been somewhat of a surprise. Buyers have not stepped up to take advantage of lower prices yet. Buying will continue, but how aggressive and at what price level is yet to be seen. It was anticipated buying would continue to push prices higher as cheese was purchased for the fifth Farmers to Families Food Box program. That did not materialize. Cheese supply is readily available for demand with production strong due to increasing milk receipts at the plant level.
Butter:
The bump of butter price Thursday is likely just a flash in the pan again as fundamentals have not changed. Butter production is increasing with inventories at many places higher than needed or maybe even wanted. Retail buyers have not come back to the market very quickly as some are still working down holiday supply they had purchased in anticipation of strong demand. Some buyers are looking ahead and contracting for 2nd quarter needs at current prices.
Outside Markets Summary:
March corn jumped 9.75 cents, closing at $5.3425. March soybeans jumped 24.25 cents, closing at $14.3050 with March soybean meal up $7.80 per ton, closing at $464.90. March wheat gained 9.50 cents, ending at $6.70. February live cattle slipped $0.17, ending at $112.07. February crude oil gained $0.66 per barrel, closing at $53.57. The DOW declined 69 points, ending at 30,992 while the NASDAQ declined 16 points, closing at 13,113.
