Milk:
Milk futures turned bearish very quickly Tuesday as cheese prices showed weakness. The weakness was slight, but it was magnified by traders selling aggressively. Trading volume was moderate rather than what is generally seen in a market like this. February and March contracts spent much of the day limit down, but the only contract remaining limit down was February. It is hard to believe February established a new contract high Monday at $20.08 and closed Tuesday at $18.68. It is very difficult to anticipate a move of this magnitude when underlying cash moves slightly. It just indicates the level of volatility that will be seen this year. USDA raised their estimate of milk production for 2020 by 200 million pounds to a total of 222.9 billion pounds. This should be last estimate for last year with the final amount released on the February report. The average Class III price for 2020 was $18.16. The price estimate was raised $1.30 next year to an average of $16.90. Class IV was $13.49 for 2020 with price raised $0.50 this year to $14.10. The all-milk price last year was $18.30, up $0.05 and was raised this year to $17.65, an increase of $1.05 from their previous estimate. Higher cow numbers and milk production per cow is expected to raise milk output.
Average Class III Prices:
| 3 Month: | $17.80 |
| 6 Month: | $17.74 |
| 9 Month: | $17.69 |
| 12 Month: | $17.62 |
Cheese:
Cheese supplies are more plentiful than last year, which may limit the extent prices move. However, buying will continue for the Food Box program, which should keep heavy supply from building inventory rapidly. The weakness of cheese Tuesday does not necessarily mean the market has turned around and will head lower. It could mean prices may chop around for a period as business is done. The concern Tuesday was the lack of aggressive buying with no loads traded even through prices slipped. USDA reduced the cheese price slightly for 2020 to an average of $1.9236, but increased their estimate 10.50 cents from December to an average of $1.74 for this year. Dry whey price was raised slightly to $0.3621 for 2020 and raised 4.50 cent this year to average $0.45.
Butter:
At least butter price held Tuesday after the losses of the past few days. No business was done, leaving no indication of market direction. USDA raised the price slightly this year to average $1.5808. They were more friendly next year, raising the price 3.50 cents to an average of $1.6050. Nonfat dry milk price last year was raised slightly to $1.0417 and raised to $1.10 this year, an increase of 3.50 cents.
Outside Markets Summary:
March corn closed 25 cents higher at $5.1725. January soybeans jumped 47.50 cents, closing at $14.22 with January soybean meal up $19.40 per ton, closing at $471.20. March wheat jumped 30.25 cents, closing at $6.65. February live cattle declined $0.92, ending at $112.47. February crude oil gained $0.96, closing at $53.21 per barrel. The DOW gained 60 points, closing at 31,069 while the NASDAQ gained 36 points, closing at 13,072.
.jpg)
