MILK
February Class III futures have fallen $2.10 over the past two days wiping out any gains made since Jan. 4. It is hard to believe that price reached $20.08 about a week ago and now closed at $17.13 Wednesday. There has been a lot of emotional trading taking place, creating substantial volatility, and this is only the beginning of the year. The weakness of cheese has had a large impact on price outlook for the near term. Fluid milk sales are falling back after a period of strong growth last year. November fluid milk sales were 4.4% below November 2019. Conventional milk sales declined 5.0%. Whole milk was down 4.4%; flavored whole milk increased 1.6%; reduced fat milk declined 0.7%; low fat declined 4.9%; fat-free skim fell 17.8%; flavored fat-reduced milk sales fell 27.8%; buttermilk declined 10.2% with other fluid milk product sales up 53.7%. Organic fluid milk sales increased 6.1%. Organic whole milk gained 2.3%; organic reduced fat milk gained 14.0%; low fat organic milk declined 7.6%; organic fat-free skim gained 4.3% with organic flavored fat-reduced milk sales up 33.9%. The reason the overall is lower is due to the fact that much more conventional milk is sold, magnifying the areas of reduced sales.
AVERAGE CLASS III PRICES
| 3 Month: | $17.03 |
| 6 Month: | $17.27 |
| 9 Month: | $17.37 |
| 12 Month: | $17.40 |
CHEESE
It was almost as if the bottom fell out of cheese Wednesday. Sellers turned more aggressive in their attempt to move product and found it difficult to find buyers, even at these lower prices. This is a concern as it was anticipated that demand would increase, keeping cheese prices steady to trending higher for a period of time. However, supply is readily available in most areas with manufacturing strong due to increasing milk production. Some plants report already growing inventory, making it less likely buyers will need to be aggressively bidding for cheese.
BUTTER
If previous patterns hold, butter price may be about done bouncing. It has generally been the pattern that price bounces two to three days and then falls back. Butter futures have not increasing very much as traders remain cautious. Inventory continues to grow as production exceeds demand.
OUTSIDE MARKETS SUMMARY
March corn declined 4 cents, closing at $5.22. March soybeans fell 16.25 cents, ending at $13.6950, with March soybean meal down $8.10 per ton, closing at $442.40. March wheat declined 4.50 cents, ending at $6.6775. February live cattle gained $0.02, closing at $113.35. February crude oil gained $0.26, closing at $53.24 per barrel. The Dow gained 258 points, ending at 31,188, while the NASDAQ gained 260 points, closing at 13,457.
