Friday Closing Dairy Market Update - January Income Over Feed Was $7.14

MILK

Class III milk futures came under substantial pressure after spot trading showed both cheese and butter declining. However, as the market moved to the close, strength slowly came back into the market. This is a good sign, even though cheese and butter prices still weakened. Class III and Class IV milk futures closed quite a bit higher for the week. The January Agricultural Prices report was released Friday, which showed an income-over-feed price of $7.14. This was $1.64 lower than December and the lowest income-over-feed price since May 2020. Those that chose the $9.50 level under the Dairy Margin Coverage (DMC) program will receive a payment of $2.35 per cwt. The average corn price in January increased 27 cents per bushel to $4.24 per bushel. The central Illinois soybean meal price rose $42.56 per ton from December, reaching $439.24 per ton in January. Alfalfa hay prices increased $2 per ton to average $171 per ton, while the premium/supreme alfalfa hay price (dairy-quality hay) within the top five milk-producing states climbed $3 per ton to average $206 per ton. The blended hay price used for the DMC program was $188.50, up $2.50 from December. The all-milk price fell $1 from last month, moving to $17.50 per hundredweight. The all-milk price in January was $2.10 lower than in January of last year.

AVERAGE CLASS III PRICES

3 Month:	$16.43
6 Month:	$17.15
9 Month:	$17.45
12 Month:	$17.46

CHEESE

For the week, blocks increased 8 cents with 17 loads traded. Barrels gained 0.75 cent with six loads traded. Block price moved back up into the range they traded in during much of November and December. That does not make the market bullish, but it does indicate support seems to be strong under the market. However, the weakness again Friday is cause for concern. Dry whey increased a penny for the week with just two loads traded.

BUTTER

Butter declined 8 cents for the week with 16 loads traded. Grade A nonfat dry milk price gained 4 cents with 27 loads traded. Churns remain active working with large cream supplies. Retail buyers are purchasing ahead for the typical increase in baking for the upcoming spring holiday of Passover/Easter. That is about four weeks away, but demand will spike early as preparation is made for the time period. This may not provide much further price upside movement, but any increase in demand is certainly welcomed.

OUTSIDE MARKETS SUMMARY

March corn gained 0.75 cent, ending at $5.5550. March soybeans declined 0.75 cent, closing at $14.0525, with March soybean meal down $0.90 per ton, closing at $423.20. March wheat plummeted 16.75 cents, ending at $6.55. April live cattle fell $1.67, closing at $1.20. April crude oil fell $2.03 per barrel, ending at $61.50. The Dow fell 470 points, closing at 30,932, while the NASDAQ gained 73 points, closing at 13,192.

Friday Midday Dairy Market Summary - Cheese and Butter Fall Back

Block cheese price declined 4.25 cents closing at $1.6175 with 7 loads traded. Barrels declined 2.75 cents closing at $1.42 with 2 loads traded. This put substantial pressure back on Class III futures with contracts steady to 44 cents lower. March is posting the greatest loss. Futures activity has increased but remains rather light. Butter price declined 2.75 cents closing at $1.47 with 7 loads traded. Grade A nonfat dry milk price increased a penny to $1.1325 with 14 loads traded. Dry whey price increased a penny to 55.75 with one load traded. Class IV futures are 4 cents higher. Butter futures are 0.25 cent to 2.02 cents higher. Dry whey futures 0.17 cent to 0.80 cent higher. The weakness of cheese and butter increases trader caution again. USDA will release the January Agricultural Prices report Friday. Significant Dairy Margin Coverage payment are expected again.

Friday Morning Dairy Market Update - Overnight Activity Showed Limited Interest

Opening Calls:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	4 to 10 higher
Butter Futures:	2 to 4 Higher

Outside Market Opening Calls:

Corn Futures:	5 to 8 Lower
Soybean Futures:	15 to 20 Lower
Soybean Meal Futures:	$4 to $7 Lower
Wheat Futures:	8 to 12 Lower

Milk:

There will be plenty of milk remaining available to the market. Dairy cattle slaughter in January indicates the continued desire to keep barns full. The large increase in milk futures Thursday improves the price outlook. September and October Class III futures touched $18.00 Thursday but could not hold that price into the close. Nevertheless, it will not take much to reach and exceed that price. There are numerous milk plants that are running at capacity now and spring flush has not even begun. Some plants are turning down loads of milk that are being offered as a steep discount. It was interesting that milk futures did not follow through to the upside last night with trade confined to the April contract. Some wide bids and offers were placed with interest in closing the distance.

Cheese:

The strong increase of cheese Thursday may bring more buyers into the market as they may want to purchase before price moves much higher. However, that will move it higher as they will be aggressive causing sellers to hold back. The reality is that there is a lot of cheese available, so the price jump Thursday or a higher trend may not be sustainable.

Butter:

Butter is holding on to the gains of the previous few weeks, potentially indicating solid support has been established. High butter supplies will keep demand satisfied. There has been increasing butter production for the export market as international buyers are taking advantage of the lower U.S. price. Price may settle into a higher trading range.

Thursday Closing Dairy Market Update - Dairy Cattle Slaughter Starts Year Lower

MILK

Class III milk futures climbed higher after spot cheese showed strong gains. Both blocks and barrels had improvements Thursday, pushing futures higher. April's limit-higher move will open up Friday's trading with expanded limits. The January Livestock Slaughter Report showed federally inspected dairy cattle slaughter 7.1% lower than a year prior at 277,300 head. January's slaughter total was the lowest for the month since 2017. The first quarter typically holds the highest dairy cattle slaughter value of the year. Lower culling, coupled with the consistent improvements in production per cow, could lead to a problematic spring flush.

AVERAGE CLASS III PRICES

3 Month:	$16.54
6 Month:	$17.21
9 Month:	$17.46
12 Month:	$17.45

CHEESE

Both block and barrels had strong gains in spot trading, the first time since Jan. 7 that both had increased in the same trading session. Growing access to COVID-19 vaccines and falling infection rates have moved many states and local municipalities to open necessary places like schools but also socially based places and events, such as sporting competitions, concerts and festivals. Foodservice purchasers may begin to feel more confident in stocking up on needed food supplies for upcoming events as the possibility of cancelations retracts.

BUTTER

Butter price firmed a bit Thursday, but the trend of gains followed by losses still seems to be in play in the butter market. Cream availability will continue to keep butter manufacturers busy into spring flush.

OUTSIDE MARKETS SUMMARY

March corn fell 4.50 cents, closing at $5.5475. March soybeans dropped 17.75 cents, closing at $14.06, and losing all of Wednesday's gains. March soybean meal declined $4.20 per ton, closing at $425.10. March wheat decreased 8.40 cents, ending at $6.7175. February live cattle gained $0.43, settling at $117. April crude oil moved up $0.31, closing at $63.53 per barrel. The Dow declined 560 points, ending at 31,402, while the NASDAQ dropped 479 points, closing at 13,119.

Fluid Milk and Cream - Western U.S. Report 8

California milk production is strong and following seasonal patterns. Some industry contacts     suggest the state is close to spring flush. With ample amounts of milk and cream,     manufacturing is operating at or near full capacity. Milk handlers are discounting a few     loads of milk to $3 or $4 under Class III. Balancing plants are running heavy. Bottling     demand is steady to higher. Class II sales are steady.

Milk production in Arizona is steady to higher. Favorable weather has kept the milking herd     comfortable. As parts of the surrounding region recover from the winter storms, normal milk     flows are returning. Manufacturers have plenty of milk available for most processing needs     and Class I sales are up slightly as the pipeline refills.

In New Mexico, milk production is recovering from last week’s winter storm. While normal     hauling patterns are resuming, some contacts think there may still be some milk discarded     due to disruptions. Manufacturers are getting back up to normal processing schedules.     However, it will be some time before the total impact of the weather on the industry will be     known. Some contacts suspect culling rates may increase in the next few weeks.

Clean up from the recent winter storm in the Pacific Northwest continues, however the region     has a few pockets that are still without power. In addition, blockage of a few mountain     passes is hindering milk collection and distribution. Most manufacturers are back up and     running, trying to catch up on dairy product orders. Class I sales are up as bottlers refill     the fluid milk pipeline. On the farm, milk output is climbing, but a few farms still need to     run generators to keep going. Industry contacts think there may still be small amounts of     milk being discarded.

In the mountain states of Idaho, Utah and Colorado milk production is stable and strong.     Industry contacts suggest that the storms last week created some disruptions to milk     handling and processing within the region, but impacts were minimal. Manufacturers have     plenty of milk for most processing needs. A few loads of milk are available at a discount of     $4.50 under Class IV.

Condensed skim orders picked up and spot loads are available. Balancing plants are running     heavy schedules, especially in the Southwest.

Western cream multiples stepped slightly higher this week. Cream is widely available, but     there is little pressure to move it. Butter churns are backlogged, trying to work through     the cream on hand and catch up from the power and supply disruptions from last week.



     Western U.S., F.O.B. Cream
     Multiples Range - All Classes:               1.0300 - 1.2100

Thursday Midday Dairy Market Summary - Cheese Prices Show Strength

Block cheese price climbed 7 cents to move to $1.66, although the last trade was a penny lower at $1.65. Blocks had improved volume as well, with 11 loads traded. Barrels moved up 6.50 cents to close at $1.4475 with 3 loads traded. Class III prices worked higher with the support of spot cheese prices. April was limit high at $17.40. The remaining contract months through the end of the year were 11 cents to 49 cents higher. Butter price increased 3.25 cents to end at $1.4975 with 2 loads traded. Grade A nonfat dry milk price jumped 2.75 cents with eight loads traded. Dry whey also had a positive day, adding 0.25 cent to move to 54.75 cent with one load traded. Class IV futures from April through June are 7 cents to 25 cents higher. Other Class IV contracts have remained quiet yet Thursday. Butter futures are unchanged to 4 cents higher. Dry whey futures are steady to 1.85 cents higher.

Thursday Morning Dairy Market Update - Markets Take Reports in Stride

Opening Calls:

Class III Milk Futures:	Steady to 5 Higher
Class IV Milk Futures:	Mixed
Butter Futures:	Steady to 1 Lower

Outside Market Opening Calls:

Corn Futures:	2 to 4 Lower
Soybean Futures:	8 to 12 Higher
Soybean Meal Futures:	$2 to $4 Higher
Wheat Futures:	Steady to 4 Lower

Milk:

There should be some follow-through buying by traders due to the strong close Wednesday and the fact that cheese price is not weakening. However, a choppy cash market will continue to make a choppy futures market. It may be difficult to get an uptrend going under the current market situation. Milk production continues to add more supply to the market that will satisfy demand and build inventory. February milk futures are basically priced and March is struggling to hold onto a higher price. Prices have been slowly eroding, which may bring it close to the February price as we move through March. USDA will release the January Livestock Slaughter report Thursday. The report will not be a market mover but should show the continued desire to hold cow numbers.

Cheese:

The overall fundamentals of the cheese market remain unchanged. Production is strong, keeping supply readily available for demand. Cheese futures show optimism with prices currently expected to reach $1.81 per pound. This is a far cry from what took place last year, but there is a lot of year remaining. A strong world price may move cheese price higher if export demand increases.

Butter:

Even though price has weakened recently, much of the substantial increase over the previous few weeks has been maintained. This may be the result of strong butter exports during the month. Food service demand is also showing signs of growth. However, inventory still has grown, according to the weekly Cold Storage report from selected surveyed warehouses. The report shows stocks for the month of February have increased 5%.

Wednesday Closing Dairy Market Update - Annual Milk Production Increased 2.2%

MILK

Class III milk futures were able to regain most, if not all, of the ground that was lost Tuesday, keeping the market sideways. That is better than retesting the lows that were seen a few weeks ago. Testing those lows is not out of the question, but for now, futures are holding current price premiums in the market. September and October futures are trying to make a run at the $18 level again. It may be realized if underlying cash prices have found a bottom and traders feel optimistic about the market. Some strength Wednesday may have stemmed from the milk production report showing production not quite as high as anticipated. However, in comparison to the January 2020 gain over December 2019 and the overall growth of milk production last year, it may not push price too much higher unless current production is absorbed by demand. Annual milk production is 2020 was up 2.2% from 2019. Milk production per cow averaged 23,777, which was an incredible 382 pounds higher than 2019.

AVERAGE CLASS III PRICES

3 Month:	$16.09
6 Month:	$16.81
9 Month:	$17.14
12 Month:	$17.19

CHEESE

Block cheese had increased the spread between it and barrels to 20.75 cents. Buyers are more aggressive for blocks than barrels with that likely a result of the Food Box program and other government purchases. The cold storage report Tuesday showed American cheese stocks slipped 952,000 pounds in January in comparison to December. Even with that decline, it is the highest January inventory since 2019 and the second-highest since 1985. The last time inventory declined from December to January was in 2018. There have been some years in the past when January inventory slipped below December, so this was not an isolated event.

BUTTER

Price has been sliding back, but sellers have not been very aggressive. Inventory growth was large in January, but somewhat in line with many other years. Butter manufacturers report plenty of cream is available. Churns are active as they are trying to utilize the available cream. Inventory is building, making it unlikely the market will see much more upside price potential than it has already shown.

OUTSIDE MARKETS SUMMARY

March corn gained 5.50 cents, closing at $5.5925. March soybeans jumped 17.75 cents, closing at $14.2375, with March soybean meal up $1.80 per ton, closing at $428.30. March wheat jumped 14.50 cents, closing at $6.8025. February live cattle gained $0.95, ending at $116.57. April crude oil gained $1.55, closing at $63.22 per barrel. The Dow gained 425 points, ending at 31,962, while the NASDAQ gained 133 points, closing at 13,598.

Wednesday Midday Dairy Market Summary - Blocks Extend Gain

Block cheese price slowly increased closing at $1.59, up 2 cents with only 1 load traded. Barrel cheese price remained unchanged and no loads traded. An unfilled bid was placed at the steady price with no interest shown from sellers. Butter price declined 2.25 cents closing at $1.4650 with one load traded. There were no unfilled bids or uncovered offers remaining at the close. Grade A nonfat dry milk price increased 0.50 cents with 1 load traded. Dry whey price slipped 0.25 cent ending at 54.50 cents with no loads traded. Class III futures are 2 cents to 25 cents higher with June posting the greatest gain. Trading is light with March the only month trading above 100 contracts. Class IV futures have not yet traded. Butter futures are 0.97 cent lower to 1.00 cents higher. Dry whey futures are steady to 0.95 cent higher.

Dairy Market: January milk production up 1.6%

Milk is flowing in the U.S. but perhaps not as much as might have been thought. The Agriculture Department’s preliminary data reports U.S. output in the first month of 2021 totaled 19.2 billion pounds, up a somewhat bullish 1.6% from January 2020.

Output in the top 24 states amounted to 18.3 billion pounds, up 1.8%.

Revisions reduced the original December total by 90 million pounds to 18.85 billion pounds, up 2.6% from December 2019, instead of the 3.1% increase originally reported.

January cow numbers increased for the seventh consecutive month, totaling 9.45 million head in the 50 states, up 8,000 from December’s count, which was revised down 1,000 head. The January herd was up 85,000 from January 2020.

January output per cow averaged 2,029 pounds, up 13 pounds or 0.6% from a year ago.

The report showed 2020 total milk output at 223 billion pounds, up 2.2% from 2019, with cow numbers at 9.39 million head, up 0.5% from 2019.

California’s January output was down 0.7% from a year ago on a 10-pound loss per cow and 4,000 fewer cows. The Golden State’s December total was revised 77 million pounds lower, resulting in a 0.5% drop from December 2019, instead of the originally reported 3.2% increase.

Wisconsin was up 3.1% in January, on a 60-pound gain per cow and 2,000 more cows.

Idaho was off 0.3%, on a 10-pound drop per cow, though cow numbers were up 1,000 head.

Michigan was up 4.3%, on a 30 pound gain per cow and 13,000 more cows. Minnesota was up 5.7%, on a 55-pound gain per cow and 12,000 more cows, and New Mexico was up 1.4%, on a 5-pound gain per cow and 4,000 more cows milked than a year ago.

New York was up 0.7%, thanks to a 15-pound gain per cow. Cow numbers were unchanged. Oregon was down 1.3% on 2,000 fewer cows but output per cow was up 5 pounds. Pennsylvania was off 0.1%, on a drop of 5,000 cows, though output per cow was up 15 pounds.

Indiana took the honors for the biggest gain, up 10.1%, but South Dakota was right behind, up 9.6%, on 13,000 more cows and 10 more pounds per cow. Texas was up 5.3%, on 30,000 more cows and 5 more pounds per cow.

Vermont was again one of nine states showing a decline, down 2.7% on 4,000 fewer cows, though output per cow was up 5 pounds.

Washington state was down 1.9% on 4,000 less cows, and output per cow down 10 pounds.

Lots of product

There’s still plenty of dairy product in the cooler. The January Cold Storage report shows U.S. butter stocks grew to 328.4 million pounds, up a whopping 54.6 million pounds or 19.9% from December and 81 million pounds or 32.7% above January 2020, 19th consecutive month they topped the year ago level.

American type cheese slipped to 800.8 million pounds, down 90,000 pounds or 0.1% from December but 21.1 million pounds or 2.7% above a year ago.

The “other” cheese climbed to 576.3 million pounds, up 1.6 million pounds or 0.3% from December and 25.3 million pounds or 4.6% above a year ago.

The total cheese inventory amounted to 1.398 billion pounds, up 2.3 million pounds from December and 44.9 million pounds or 3.3% above a year ago.

Weather woes

Winter weather has hit the USA hard, especially in Texas, where over 4 million people were without electricity and temperatures fell to record lows in some parts.

HighGround Dairy reported that regulators were prioritizing electricity access to residential areas and balancing surging demand as people heat homes with significant generation loss. Natural gas-powered plants were offline, wind turbines were frozen solid and solar panels were covered in snow.

Impacts were significant on dairy farms and processing plants over the weekend, according to HGD. “Milk production and collection was impacted in the Texas panhandle and in other parts of the state as record low temperatures created significant on-farm complications. Processing plants were shut down, as utilities restricted electricity and natural gas availability to industrial users. Milk dumping was prevalent across the state,” according to HGD.

Butter climb ends

Last week’s Global Dairy Trade auction propelled CME butter higher in the President’s Day holiday-shortened week and added to the previous week’s 12.75-cent gain. The price jumped 6 cents last Tuesday, 4 cents Thursday, and 5.50 cents Friday, closing at $1.55 per pound, up 15.50 cents on the week, highest since Sept. 22, 2020, but 26 cents below a year ago. Only 9 sales were reported on the week.

The butter gave back 4 cents Monday and was down 2.25 cents Tuesday, slipping to $1.4875.

This is the last week that old crop butter can be brought to the spot market. Central butter production is strong due to seasonal demand and the current availability of cream, says Dairy Market News, and churning was notably active. The weather situation in the southern U.S. had some Midwestern butter producers taking on cream that would otherwise lack a destination.

Western butter makers report demand for bulk and print butter is higher compared to the last few months. Retail sales have picked up but inventories are heavy and old crop butter is readily available.

Cheese was unchanged last Tuesday but headed south from there. The Cheddar blocks fell to $1.51 per pound Thursday, lowest since May 12, 2020, but regained 2.75 cents Friday to close at $1.5375, down 2 cents on the week and 23 cents below a year ago.

The barrels finished 7.75 cents lower, at $1.4125, 17.75 cents below a year ago; 7 cars of block traded hands last week and 26 of barrel.

The blocks tacked on 3.25 cents Monday, hitting $1.57, and stayed there Tuesday. The barrels were unchanged Monday but lost 3 cents Tuesday, slipping to $1.3825, 18.75 cents below the blocks.

Cheese market tones remain uncertain, says DMN, though demand is strong, according to a growing number of Midwestern producers, as more areas are lifting dining restrictions at restaurants and bars.

The western cheese market appears to be in the same holding pattern that it has been in the last few months. Manufacturers report that milk is ample and are running plants at or near full capacity.

Grade A nonfat dry milk was down 2 cents last week, finishing at $1.0925 per pound, 7.75 cents below a year ago, with 17 sales for the shortened week.

Monday’s powder moved up 0.50 cents but then backed down 0.75 cents Tuesday to $1.09.

CME dry whey climbed to 55 cents per pound last Wednesday, highest since Oct. 19, 2018, but closed Friday at 54.75 cents per pound, up 0.50 cents on the week and 17.75 cents above a year ago. Only 2 sales were reported on the week.

The whey was unchanged Monday and Tuesday.

Class I down 34 cents

The March Federal order Class I base milk price was announced by the USDA at $15.20 per hundredweight, down 34 cents from February, $2.26 below March 2020, and equates to $1.34 per gallon, down from $1.50 a year ago. The three-month Class I average stands at $15.29, down from $18.01 a year ago.

Fluid sales up 1.5%

The plunge in fluid milk sales reversed direction in December. USDA’s latest data shows 4.0 billion pounds of packaged fluid products were sold, up 1.5% from December 2019, and followed a 4.4% drop in November.

Conventional product sales totaled 3.8 billion pounds, up 1.1% from a year ago. Organic products, at 253 million pounds, were up 8.9%, and represented 6.3% of total sales for the month.

Whole milk sales totaled 1.3 billion pounds, up 1.4% from a year ago. Sales for the year totaled 15.5 billion pounds, up 2.6% from 2019, and made up 33.5% of total milk sales for December and 33.6% for the year.

Skim milk sales, at 234 million pounds, were down 11.0% from a year ago and down 14.6% for the year.

Total packaged fluid milk sales, January through December, amounted to 46.2 billion pounds, down just 0.1% from 2019.

Conventional product sales totaled 43.3 billion pounds, down 0.7%.

Organic products, at 2.9 billion pounds, were up 10.4% and represented 6.2% of total fluid milk sales in 2020.

From: Capital Press

Wednesday Morning Dairy Market Update - Markets Take Reports in Stride

Opening Calls:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Steady to 5 Lower
Butter Futures:	1 to 2 Lower

Outside Market Opening Calls:

Corn Futures:	2 to 3 Higher
Soybean Futures:	6 to 12 Higher
Soybean Meal Futures:	$3 to $5 Higher
Wheat Futures:	1 to 3 Higher

Milk:

Milk production continues to increase as the calendar moves closer to spring flush. Milk production in January was 1.6% higher than a year earlier. This compares to a gain of 1.3% for January 2020 compared to January 2019. It is much in line with the continued growth we have seen in the industry. Weather has turned more seasonal with March just around the corner. Cow numbers continue to increase, which will keep production increasing as we move through spring. The hope is that demand will be able to keep up with increased production and that plants will be able to handle the milk. Spot milk price discounts were reduced last week as milk supply was disrupted due to the severe winter storm, but deeper discounts are expected to return now that milk production will regain much of what was lost.

Cheese:

The weakness of barrels and the inability of blocks to hold gains Tuesday, gives the impression that further weakness could unfold. However, the market has moved into what may be a sideways range for the time being. Lower prices should spur demand, which was seen on the Cold Storage report. American cheese showed a slight decline from December with total cheese only showing a minor increase. With strong cheese production, this certainly is positive.

Butter:

The growth in butter stocks in January of 54.6 million pounds is a large monthly increase, leaving plentiful supplies available to the general market. The old-crop/new-crop issue on the CME on March 1 many times has a short-term influence on the spot butter market. March 1 marks the date that butter produced prior to Dec. 1, 2020, is no longer able to be traded on the CME daily spot market. However, all butter is available to the general market, making this somewhat of a moot point. Cash weakness is expected again Wednesday.

Tuesday Closing Dairy Market Update - January Milk Production Up 1.6%

MILK

There was a lot of information to digest Tuesday with two major reports being released. The January Milk Production report showed production in the top 24 states up 1.8% from January 2020. Milk output in December was reduced 74.0 million pounds, or 0.4%, resulting in production up 2.6% for the month. Production per cow was 15 pounds above January 2020, averaging 2,049 pounds for the month. Cow numbers totaled 8.93 million head and 6,000 head more than December. Milk production in the U.S, increased 1.6%, totaling 19,170 pounds. Production per cow increased 15 pounds. Cow numbers increased 8,000 head from December and are up 85,000 head over January 2020, totaling 9.45 million head. One of the reasons milk production was not as high as anticipated on this report is because USDA made significant revisions higher for numerous months in 2020. This reduced the increase on this report. Nevertheless, there is significant production coming from a lot of cows.

AVERAGE CLASS III PRICES

3 Month:	$15.98
6 Month:	$16.66
9 Month:	$17.01
12 Month:	$17.09

CHEESE

The action of cheese prices Tuesday left much to be desired. The inability of blocks to hold gains increased the caution of traders over buying into the market. There was some friendliness stemming from the January Cold Storage report in the fact that it showed American cheese inventory declining 952,000 pounds from December and again another unusual event. Inventory remains 3% higher than a year ago. This is positive to the market; however, the daily spot cheese market has not been reflecting this. It indicates there is plenty of cheese available for demand. Swiss cheese increased 1.5 million pounds and is 7% below a year ago. Other cheese stocks increased 1.6 million pounds and is 5% above a year ago. This put total cheese stocks at 1.398 billion pounds and 3% above a year ago.

BUTTER

Butter inventory in January totaled 328.4 million pounds. This was an increase of 54.6 million pounds, or 20%, from December with current inventory 33% above January 2020. This is the highest January inventory since 1993.

OUTSIDE MARKETS SUMMARY

March corn gained 2.75 cents, closing at $5.5375. March soybeans jumped 22.25 cents, closing at $14.06, with March soybean meal up $3.40 per ton, closing at $426.50. March wheat gained 1.75 cents, ending at $6.6575. February live cattle slipped $0.10, closing at $115.62. April crude oil slipped $0.03, closing at $61.67 per barrel. The Dow gained 16 points, ending at 31,537, while the NASDAQ declined 68 points, ending at 13,465.

January Milk Production up 1.8 Percent, 2020 Production up 2.2 Percent from 2019

January Milk Production up 1.8 Percent 

Milk production in the 24 major States during January totaled 18.3 billion pounds, up 1.8 percent from January 2020. December revised production, at 18.0 billion pounds, was up 2.6 percent from December 2019. The December revision represented a decrease of 74 million pounds or 0.4 percent from last month's preliminary production estimate. 

Production per cow in the 24 major States averaged 2,049 pounds for January, 15 pounds above January 2020. 

The number of milk cows on farms in the 24 major States was 8.93 million head, 92,000 head more than January 2020, and 6,000 head more than December 2020. 

2020 Annual Milk Production up 2.2 Percent from 2019 

The annual production of milk for the United States during 2020 was 223 billion pounds, 2.2 percent above 2019. Revisions to 2019 production increased the annual total 59 million pounds. Revised 2020 production was up 165 million pounds from last month's publication. Annual total milk production has increased 13.7 percent from 2011. 

Production per cow in the United States averaged 23,777 pounds for 2020, 382 pounds above 2019. The average annual rate of milk production per cow has increased 11.5 percent from 2011. 

The average number of milk cows on farms in the United States during 2020 was 9.39 million head, up 0.5 percent from 2019. The average number of milk cows was revised up 6,000 head for 2020. The average annual number of milk cows has increased 2.1 percent from 2011.

Tuesday Midday Dairy Market Summary - Class III Futures Fall

Block cheese price remained unchanged at $1.57 with two loads traded. Price initially increased 0.75 cent before selling pressure brought price back down. Barrel cheese price declined 3 cents, settling at $1.3825 with one load traded. This trigged increased selling pressure in Class III futures, pushing the March contract as much as 59 cents lower. Trading activity increased significantly in closer contracts. Futures are 50 cents lower to 2 cents higher with March showing the greatest loss; front-month February shows the only increase. Butter price declined 2.25 cents, closing at $1.4875 with six loads traded. Price initially fell 6.25 cents before buying interest moved it off the low. Coming off the lows is positive, while closing lower is negative. Grade A nonfat dry milk price declined 0.75 cent, closing at $1.09 with two loads traded. Dry whey price remained unchanged at 54.75 with no loads traded. Class IV futures have not yet traded. Butter futures are 1.02 to 2.15 cents lower. Dry whey futures are steady. USDA will release the January Milk Production and Cold Storage reports Tuesday afternoon.

Tuesday Morning Dairy Market Update - Two Major Reports Today

Opening Calls:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Steady to 5 Lower
Butter Futures:	1 to 2 Lower

Outside Market Opening Calls:

Corn Futures:	2 to 4 Higher
Soybean Futures:	15 to 20 Higher
Soybean Meal Futures:	$3 to $6 Higher
Wheat Futures:	5 to 8 Lower

Milk:

Even though block cheese price moved higher Tuesday, the increase of Class III futures was moderate confined to single-digit gains. Overnight trade was confined to the March contract with only one contract traded 12 cents lower. Traders want to see the market move higher but remain cautious due to two major reports being released Tuesday. The January Milk Production report is expected to show strong milk output during the month. I estimate milk production to show an increase of 3.2% similar to what it was in December. This may be a bit conservative due to January having relatively mild weather allowing for good cow comfort and strong milk production. I estimate cow numbers to be up 5,000 head. The January Cold Storage report will have implications on price strength. Inventory is expected to increase from December. Both of these reports together may keep buyers of dairy products less aggressive as there will be sufficient milk and dairy products to satisfy demand.

Cheese:

Block cheese price increased the past two days erasing the losses of late last week. Price continues to remain below the sideways range it had been in during the period from mid-November through the end of December. Current fundamentals may allow price to move to that previous level, but it may need a significant change in supply and demand to push it higher. The Cold Storage report Tuesday is expected to see further growth in American cheese inventory. This would be seasonal, but bearish because it has already increased in November and December.

Butter:

Price declined after gaining the previous six consecutive sessions. This may be the beginning of a price retracement. Butter inventory is expected to show an increase on the Cold Storage report Tuesday. It may not as much as it has been due to some strong export demand, but it will be significantly higher than a year ago. Stocks could be almost 50% higher than January 2020.

Monday Closing Dairy Market Update - Class III Milk Futures Post a Modest Close

MILK

Class III milk futures made a valiant attempt to push higher during and shortly after spot cheese traded, but could not hold the double-digit gains. But at least contracts were steady to higher for the day. There is not a lot of news out there now to have any significant impact on the market. The weather event is history with farms getting things back up and running again. Cows will come back up again on milk production as milder weather dominates the country. Milk futures are expected to chop around for a period of time as the market assesses supply and demand moving through the first quarter of the year. USDA will release the January Milk Production report on Tuesday, and it is expected to show a significant gain over a year ago. Large cow numbers and strong milk production per cow during the mild weather experienced during the month should show a strong increase in milk output.

AVERAGE CLASS III PRICES

3 Month:	$16.26
6 Month:	$16.88
9 Month:	$17.17
12 Month:	$17.20

CHEESE

Cheese is just kind of bumping along. Price increases are welcomed, but when looking at the larger picture on price charts, they have not performed very well. It is possible some level of support may be found near the current level, but that may not necessarily mean that prices will begin to trend higher. The market will need to see greater demand that will offset strong cheese production to cause the market to trend higher. Lower prices should increase demand, but demand needs to exceed production to tighten supply. This may be difficult to achieve anytime soon.

BUTTER

Price strength may have run its course for the time being. Buyers' needs may have been satisfied for now with sellers may be stepping back up to the plate again now that price has weakened. Production continues to remain strong due to plentiful cream supplies. Churns are utilizing the available cream rather than limiting production and selling extra cream. This is very difficult as very few plants are in the market for any extra cream due to plentiful supplies of their own.

OUTSIDE MARKETS SUMMARY

March corn gained 8.25 cents, closing at $5.51. March soybeans gained 6.50 cents, ending at $13.8375, with March soybean down $1.20 per ton, closing at $423.10. March wheat jumped 13.25 cents, ending at $6.64. February live cattle slipped $0.20, closing at $115.72. March crude oil jumped $2.25, closing at $61.49. The Dow gained 27 points, ending at 31,522, while the NASDAQ fell 341 points, closing at 13,533.

Monday Midday Dairy Market Summary - Butter Falls Back

Block cheese price increased 3.25 cents, closing at $1.57, with two loads traded. Barrel cheese price remained unchanged at $1.4125 with no loads traded. Butter declined 4 cents, closing at $1.51, with no loads traded. There was a bid placed at $1.50 with no interest by the buyer to raise that bid. The seller continued to offer the price lower in the attempt to sell a load, but to no avail. After six consecutive days of increase with price gaining 28 cents, it came to a halt Monday. It is unclear whether this could be the beginning of the end of the trend higher or if it is just a correction in a bullish market. Grade A nonfat dry milk price increased $0.50, closing at $1.0925, with two loads traded. Dry whey price remained steady at 54.75 cents with no loads traded. Class III futures are 3-10 cents higher. Class IV futures have not yet traded. Butter futures are 2.95 cents lower to 0.65 cent higher. Dry whey futures are 0.22 cent lower to 0.65 cent higher.

Monday Morning Dairy Market Update - Uncertain Price Direction

Opening Calls:

Class III Milk Futures:	Steady to 5 Higher
Class IV Milk Futures:	5 to 10 Higher
Butter Futures:	1 to 3 Higher

Outside Market Opening Calls:

Corn Futures:	3 to 5 Higher
Soybean Futures:	Steady to 4 Higher
Soybean Meal Futures:	$1 to $2 Lower
Wheat Futures:	2 to 5 Higher

Milk:

The market has absorbed and adjusted to the weather impact of last week. There was some milk dumped in those areas hardest hit, but the loss was minimal for the overall market and confined to a small area. Trading in milk futures may be slow to get going after the weekend with little news to provide market direction. The cold weather is now behind in most areas, which will thaw things out again and improve cow comfort. Milk production is expected to rebound to levels it was prior to the adverse weather.

Cheese:

There is no telling where cheese could go Monday. The price charts are not friendly with blocks remaining at a low price despite the increase Friday. I will take quite a bit of fundamental change to cause price to trend higher. Hopefully, cheese prices may be low enough to increase demand.

Butter:

Butter has been strong, resulting in price being able to finally move above cheese prices. Export demand has increased providing some of the support. Large inventory is expected to a lid on the extent of the price increase. USDA will release the January Cold Storage report Tuesday, providing an idea of the level of inventory currently on hand.

Friday Closing Dairy Market Summary - Class III Futures Slip for the Week

MILK

Even with adverse weather that took place over a substantial swath of the country, Dairy Market News reports that milk production is rising overall. Milk dumping has been taking place in the south-central part of the country as well as the Pacific Northwest. Milk supply is plentiful with processing plants running at or near capacity. Some have taken on extra milk from those areas where plants were shut down for a few days. Some plants will be scheduling maintenance time before spring flush begins to gear up. Demand is expected to surge once those areas hit by winter storms thaw out and retail demand increases as consumers will restock. There will be an ebb and flow until everything settles out again. Class III futures closed lower for the holiday-shortened week due to pressure on cheese prices. Class IV, on the other hand, fared better, closing steady to higher.

AVERAGE CLASS III PRICES

3 Month:	$16.21
6 Month:	$16.83
9 Month:	$17.14
12 Month:	$17.18

CHEESE

For the week, block cheese declined 2 cents with seven loads traded. Barrels declined 7.75 cents with 26 loads traded. Dry whey price increased 0.50 cent with just two loads traded. It certainly has been an interesting week, with some anticipating cheese prices would increase due to the impact of adverse winter weather. However, it did not seem to have an impact on the overall market. Cheese demand is reported to be strong as increased demand is coming from the foodservice industry. However, that will be an ongoing issue throughout the rest of the year as restrictions on gatherings are slowly lifted. The restaurant industry will eventually rebound as much as it can after the impact of COVID-19.

BUTTER

Butter ended a very positive week with price gaining 15.50 cents with nine loads traded. Price was able to move above cheese where it has not been for a long period of time. One element that might be pushing butter price is that butter produced in 2020, termed "old crop" butter, cannot be sold on the daily spot market beginning March 1. Only butter made this year will be able to be traded. Most years, this causes a bump in price until that event is behind. A large amount of butter is still in inventory and can be moved to fill demand but just not traded on the daily spot market. This should not have any long-term impact on the market. Grade A nonfat dry milk declined 2 cents this week with 17 loads traded.

OUTSIDE MARKETS SUMMARY

March corn declined 7.50 cents, closing at $5.4275. March soybeans gained 2.25 cents, ending at $13.7725, with March soybean meal down $1.60 per ton, closing at $424.30. March wheat fell 11.75 cents, ending at $6.5075. February live cattle gained $0.80, closing at $115.92. March crude oil fell $1.28, closing at $59.24 per barrel. The Dow gained 1 point, ending at 31,494, while the NASDAQ gained 9 points, ending at 13,874.

Friday Midday Dairy Market Summary - Butter Continues Higher

Block cheese price increased 2.75 cents closing at $1.5375 with 2 loads traded. Barrel cheese price declined 1.25 cents closing at $1.4125 with 13 loads traded. Price movement was rather slow until the final call period of trading at which time buyers become more aggressive in blocks as they wanted to purchase some cheese. Barrel trading became more active with price coming up 2 cents from its lows. The strength of blocks more than offset the decline of barrels, but it has had limited impact on Class III futures. Futures have come back from the lows but remain steady to 20 cents lower across the board. Butter resumed the uptrend after taking a breather yesterday. Price increased 5.50 cents closing at $1.55 with 5 loads traded. This moves butter price above cheese where it has not been for quite some time. Grade A nonfat dry milk price slipped 0.25 cent ending at $1.0925 with 2 loads traded. Dry whey price slipped 0.25 cent closing at 54.75 with no loads traded. Class IV futures are steady. Butter futures are steady to 3.35 cents higher. Dry whey futures are 0.28 cent to 0.85 cent lower.

Friday Morning Dairy Market Update - Butter May Be at a Crossroad

Opening Calls:

Class III Milk Futures:	4 to 10 Lower
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

Outside Market Opening Calls:

Corn Futures:	Mixed
Soybean Futures:	2 to 4 Higher
Soybean Meal Futures:	Steady to $1 Higher
Wheat Futures:	Mixed

Milk:

Class III milk futures have been slowly eroding the past two days due to weakness of cheese prices. The good news is that Class IV futures have been slowly improving, bringing the price spread closer together. But that can change quickly again based on underlying cash. The storm system that has been dominating the news will be moving out this weekend, but it is leaving significant challenges in its wake. Some milk has been dumped and processing has been affected in those areas hit the hardest. However, the market has taken this in stride, and in the end, it will likely have little impact on the market as a whole. Milk and cream will still be sent out of those regions that continue to struggle with blackouts and natural gas shortages. Cow comfort and feeding schedules have been impacted but will return to normal over a short period of time. There is disaster assistance available for those who have been impacted by the storm though USDA. Producers will need to contact local FSA offices to see what assistance is available and what is required. Documentation will be important.

Cheese:

Cheese prices have not performed well this week with the expectation further weakness may unfold Friday. Overall cheese production remains strong. Excess milk is available for those who want it. Discounts are a little less than they have been due to the impact of the storm in some areas. Plants want to continue to move product in order to limit inventory build at the plant level.

Butter:

Spot trading will be watched closely as the stability Thursday with no interest shown in doing business leaves traders anxious over price direction. It has been an exceptional run higher over the past 1 1/2 weeks. Export interest has increased, but inventory continues to remain high. Buyers may have reached price resistance for the time being. 

Thursday Closing Dairy Market Update - March Class I Price: $15.20

MILK

The adverse winter weather has cut a large swath across the country, but this impact has been felt the most in Texas. There have been more reports of milk that has been dumped due to the inability of getting it picked up or because of no electricity or plant workers. Some milk and cream has been able to move out of the area to be absorbed by other processors. Other areas report delays, but not the loss of milk. Spot milk prices in the Midwest are not as low as they had been due to milk output being affected. Spot prices are reported at the most $6.50 below class. It is difficult to say how much impact from these storms will be felt over the next month or so. The opposite is seen in the West, as California milk output is heavy, and plants are running at capacity. So far, buyers of cheese have not been concerned as price has slowly eroded this week. This leaves little room for plants to take on extra milk even though it carries an attractive price. The March Class I price is $15.20, down $0.34 from February.

AVERAGE CLASS III PRICES

3 Month:	$16.29
6 Month:	$16.93
9 Month:	$17.22
12 Month:	$17.25

CHEESE

Prices are moving in the wrong direction from what many had hoped. If there is little support being felt with ongoing government purchases now, what would it be like if Food Box programs are not extended and other supplemental programs are scaled back? That is not expected to happen anytime soon, but if it does, the supply-and-demand balance might be tighter due to some other reason. Weekly cold storage in selected surveyed warehouses shows a 3% decrease of cheese for the first half of the month.

BUTTER

Butter took a breather Thursday from the strong gains of the past week. Now the question will be whether it is a pause before resuming the higher trend or if it has reached a plateau. Friday will provide an answer for that. Butter production remains strong due to plentiful cream supply. Some plants in the Midwest report taking some cream loads that have come from Texas or nearby areas, as it is unable to be processed in those regions due to adverse weather. The storm system will move out this weekend, allowing things to get back to normal over time. Weekly cold storage in selected surveyed warehouses shows an increase of 8% for the first half of the month.

OUTSIDE MARKETS SUMMARY

March corn declined 2.75 cents, ending at $5.5025. March soybeans dropped 8.75 cents, ending at $13.75, with March soybean meal down $5.80 per ton, closing at $425.90. March wheat jumped 18.50 cents, closing at $6.6250. February live cattle declined $0.17, ending at $115.12. March crude oil declined $0.62, closing at $60.52 per barrel. The Dow lost 120 points, closing at 31,493, while the NASDAQ dropped 100 points, ending at 13,865.