MILK
Most Class III contracts closed higher as the market corrected from the large losses Tuesday. Significant weakness of cheese prices did not push futures lower as the market needed to correct to keep somewhat in line with cash and expected prices. Thursday, futures will move in the direction of cash as they have come in line. Class III futures still hold some good prices despite the large declines Tuesday. December Producer Price Differentials (PPDs) finally showed positive prices after six months of negative PPDs. The Central Order number 32 has a PPD of $0.51. Midwest Federal Order number 33 has a PPD of $1.18, and the Upper Midwest Order number 30 has a $0.17 PPD, to name a few. Due to space, I did not list all the Federal orders, but it gives an idea of what you might see in your area. Milk supply is sufficient for all needs. Many Class II and III operations are running at capacity with mild weather keeping milk production strong. Soybean and soybean meal prices fell back Wednesday after the reaction Tuesday to the bullish World Agricultural Supply and Demand Estimates report. However, old-crop corn prices pushed higher.
Average Class III Prices
| 3 Month: | $17.90 |
| 6 Month: | $17.86 |
| 9 Month: | $17.77 |
| 12 Month: | $17.69 |
CHEESE
There are some reports that cheese sales in some areas are improving. There are also reports in the Midwest that buyers have booked product out through the first quarter in order to ensure supply rather than compete with buying that may take place to fill food boxes. There seems to be sufficient cheese available that is satisfying demand and not creating the panic buying on the spot market as it did last year. Cheese production is strong due to heavy milk supply.
BUTTER
Butter output remains strong due to heavy cream supply and many plants running on seven-day weeks. Inventory is already growing after ending the year significantly higher than 2019. This is being reflected in spot price as it fell to the lowest level since May 6. The decline of exports and demand from the food service industry is not helping to provide support.
OUTSIDE MARKETS SUMMARY
March corn jumped 7.25 cents, closing at $5.2450. March soybeans fell 12 cents, closing at $14.0625, with March soybean meal $8.30 per ton, closing at $457.10. March wheat declined 4.50 cents, ending at $6.6050. February live cattle declined $0.22, closing at $112.25. February crude oil declined $0.30, closing at $52.91 per barrel. The Dow slipped 8 points, closing at 31,060, while the NASDAQ gained 57 points, ending at 13,129.
