Milk:
Adverse wither weather in a large area of the country is having an impact on milk output. It is not so much that production is slowing, but it is not increasing, just remaining somewhat steady. Even so, spot milk in the Central region continues to be offered as much as $8.50 below class. The usual for this time of year is $1.00 to $3.00 under. Milk production in the West is increasing seasonally, keeping plants sufficiently supplied. Class III futures increased substantially Thursday in anticipation of strong cheese prices. This pushed March and April limit up into the close. Strength will carry over into trading tonight to some extent, but follow-through may be limited due to March and April not having a pool of contracts that needed to be liquidated at the close. The continued prospect of good milk prices will keep culling low and barns full. There is some concern over the amount of milk that might be available during spring flush, but that will be dealt with when the time comes. January Producer Price Differentials are again negative.
Average Class III Prices:
| 3 Month: | $16.74 |
| 6 Month: | $17.26 |
| 9 Month: | $17.44 |
| 12 Month: | $17.41 |
Cheese:
There is indication that cheese inventory is increasing due to current production exceeding demand. Weekly cold storage reports from selected surveyed warehouses support this information. There is hope increased government purchasing will at least utilize increased production, limiting inventory growth.
Butter:
The increase of butter price Thursday provides a strong indication that a bottom has been set in the market. Price may not continue to trend higher, but may move into more of a sideways trading range. Churning remains very active due to heavy cream supplies. There has been no indication plants are attempting to reduce production in order to balance inventories. Selling extra cream is a difficult task due to plentiful supplies. This leaves the only alternative producing butter and putting it in storage.
Outside Markets Summary:
March corn gained 6.50 cents, closing at $5.41. March soybeans jumped 13.50 cents, ending at $13.6750 with March soybean meal gaining $6.60 per ton, closing at $428.90. March wheat declined 2 cents, ending at $6.3350. February live cattle declined $0.60, closing at $115.32. March crude oil declined $0.44, ending at $58.24 per barrel. The DOW slipped 7 points, closing at 31,431 while the NASDAQ gained 53 points, ending at 14,026.
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