MILK
Class III milk futures closed mixed at the end of the day. The divergence of cheese prices and weakness of butter kept futures choppy. However, after futures moved to settlement for the day, continued trading showed futures posting double-digit gains. This may carry through in Thursday evening trading as late market bids were higher. This certainly was not due to dairy product production during the month of December, as that showed a continued increase of product due to strong milk output. The strength may stem from the increase of barrel price over the past two days narrowing the price gap to blocks. It could also be that short-covering was triggered near the end of the day with traders wanting to take profits just in case more strength in cheese prices unfolds. Trading activity was light in later contracts as a few trades can make exaggerated market movement. Dairy Market News reports that some contacts in the Central Region are concerned over cow health and milk output over the next week or so, as significant amounts of snow and frigid winter temperatures are in store for many areas. Right now, milk supply is plentiful, as spot milk is running as much as $8.50 below class compared to last year at this time when it was just $1.50 under. A little less milk production might be beneficial for reducing some of the growing milk supply for a temporary period.
AVERAGE CLASS III PRICES
| 3 Month: | $15.97 |
| 6 Month: | $16.49 |
| 9 Month: | $16.79 |
| 12 Month: | $16.86 |
CHEESE
American-type cheese production totaled 461 million pounds in December, according to the Dairy Products report. This was 2.9% above November and 1.0% above December 2019. Italian-type cheese production totaled 485 million pounds, up 5.9% from November and 0.3% above a year ago. Total cheese production reached 1.13 billion pounds, up 2.6% above November and 0.5% above December 2019. The production of dry whey increased 2.3%, totaling 81.7 million pounds from a year earlier.
BUTTER
Butter output reached 206 million pounds, up 18.7% from the previous month of November and up 11.8% from December 2019. Nonfat dry milk production totaled 205 million pounds, up 24.1% with skim milk powder production down 36.9%, totaling 40.9 million pounds compared to a year earlier. Ice cream production increased 11.4% to 52.4 million gallons.
OUTSIDE MARKETS SUMMARY
March corn declined 2 cents, closing at $5.50. March soybeans gained 1.25 cents, ending at $13.7250, with March soybean meal down $2.40 per ton, closing at $433.10. March wheat fell 10.75 cents, closing at $6.3750. February live cattle gained $0.97, ending at $116.45. March crude oil gained $0.54, closing at $56.23 per barrel. The Dow gained 332 points, ending at 31,056, while the NASDAQ gained 167 points, closing at 13,778.
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