MILK
Milk futures plummeted Tuesday with Class III contracts through June posting closing prices below $17. A stronger barrel price had no impact on the bearishness that has swept the market since Monday. Traders have thrown in the towel of optimism for the time being. The hopes for stronger prices due to increased demand from the Food Box program have been a disappointment. The market is trading fundamentals and not the price movements of last year. Fourth-quarter milk production was up 3.0% from the same period the previous year, according to the milk production report released Monday. This is just slightly less than the 3.1% increase of the first quarter. There were just six states of the top 24 states that showed milk production declines in December. Florida showed the largest decline of 5.0%, followed by Vermont with a decline of 3.1%. Washington was down 0.9%, Georgia was down 0.7%, with both Oregon and Utah down 0.5%. The largest milk production gain was seen in South Dakota with an increase of 11.9%, followed by Indiana with a gain of 9.8%. Texas increased 7.5%, and Kansas increased 5.1%. The rest of the states showed increases of less than 5.0%. Grain prices increased sharply today as strong demand offset some better crop conditions in Brazil and Argentina.
AVERAGE CLASS III PRICES
| 3 Month: | $16.02 |
| 6 Month: | $16.45 |
| 9 Month: | $16.73 |
| 12 Month: | $16.84 |
CHEESE
Barrel cheese tried to push higher Monday, but higher prices also brought those interested in selling. Price could not hold the gains. The bearish impact of the cold storage report reverberated throughout the complex, affecting futures through the rest of the year. This is real and increased buying for the Supplemental Nutrition Assistance Program (SNAP), and the Food Box program may not have as much impact as it did last year. Since the announcement of government purchases for these programs, cheese prices have eroded substantially.
BUTTER
Price fell below the previous low, moving price back to the lowest level since early May. Plants have not been trying to balance inventory with demand as there has just been too much cream available. Plants have been having difficulty selling extra cream and have been churning higher volumes and putting the finished product in storage. This will be an anchor on the market for some time to come.
OUTSIDE MARKETS SUMMARY
March corn jumped 20.75 cents, closing at $5.3225. March soybeans jumped 27.50 cents, ending at $13.71, with March soybean meal up $6.90 per ton, closing at $436.50. March wheat jumped 16.50 cents, closing at $6.65. February live cattle gained $0.52, closing at $117.05. March crude oil declined $0.16, ending at $52.61 per barrel. The Dow slipped 23 points, closing at 30,937, while the NASDAQ declined 10 points, ending at 13,626.
