MILK
Milk supplies are generally more adequate than needs in some cases. The result is more milk is available for manufacturing, as it is diverted from fluid plants to other dairy products. More manufactured dairy products are moving to storage for the time being, as milk is being utilized in whatever capacity it can be. The hope is that milk will not need to be dumped during spring flush and that it can be utilized even if inventory builds. The downside will be that more will be available to the market for a longer duration of time, potentially keeping prices lower. However, as we have experienced last year, the market can change quickly and price can move substantially. A repeat of last year is not likely unless another unforeseen event takes place. Milk futures do not show much in the way of price premiums or discounts. If current futures prices come to fruition, it may be a somewhat boring year. The likelihood of that happening is very small as traders will be quick to jump on board and purchase futures aggressively if there is a change in trend or a boost in demand. Tuesday is the last day to trade January futures and options with the Federal Order class prices to be announced on Wednesday.
AVERAGE CLASS III PRICES
| 3 Month: | $15.93 |
| 6 Month: | $16.35 |
| 9 Month: | $16.67 |
| 12 Month: | $16.80 |
CHEESE
The minor increase of block cheese price Monday is being viewed as a short-term bounce, otherwise March Class III futures would not have remained under heavy selling pressure. Cheese production is strong and expected to increase as milk receipts continue to increase. Spot milk prices are showing nearly twice as much discount as usual during this time of year. Cheese plants are running at full schedules, processing as much as possible to meet demand with the excess moving to storage. Retail cheese demand remains good, but it is slower during this time of year. Government purchasing should limit the amount that will move to inventory.
BUTTER
The market is hurting as there is no bottom in sight for price. The decline seems to be increasing in intensity as sellers want to move product. Churns are not attempting to limit production due to the difficulty of finding buyers for any cream they would like to sell. Butter is being produced and stored in the hope that food service demand will improve over time and inventory will decrease. For now, heavy supplies will dominate the market.
OUTSIDE MARKETS SUMMARY
March corn gained 2.25 cents, closing at $5.4925. March soybeans declined 4.75 cents, ending at $13.6525, with March soybean meal down $0.50 per ton, closing at $430.50. March wheat fell 12 cents, ending at $6.51. February live cattle slipped $0.17, ending at $114.87. March crude oil jumped $1.35, closing at $53.55 per barrel. The Dow gained 229 points, ending at 30,212, while the NASDAQ jumped 333 points, closing at 13,403.
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