Milk:
Milk futures closed mixed as the movement of underlying cash did not trigger strong buying or selling by the trade. February is now front month due to the January contract finishing trading ahead of the Federal Order prices release Wednesday. February is trying to follow underlying cash closely as it needs to converge close to cash generally by the middle of the month. There still can be quite a bit of movement in February, but March and April will be more reactive to underlying price movement. Traders anticipate a January Class III price of $16.12 and a Class IV price of $13.80. Milk futures did not move much Tuesday, but at least they held support. Block cheese price has been able to stem the selling interest for the time being. Underlying cash prices will be key to market direction. It is possible government buying for food programs is providing sufficient support to keep prices from falling lower, but that remains to be seen. The Global Dairy Trade auction trade weighted average price increased 1.8%, making it the sixth consecutive event posting an increase. Anhydrous milk fat price increased 1.3% to $5,463 per metric ton (mt) or $2.48 per pound. Butter increased 6.2% to $5,028 mt or $2.28 per pound. Buttermilk powder jumped 10.7% to $3,180 mt or $1.44 per pound. Cheddar cheese price increased 2.3% to $4,178 mt or $1.90 per pound. Lactose gained 3.8% to $1,217 mt or $0.55 per pound. Skim milk powder declined 1.5% to $3,198 mt or $1.45 per pound. Whole milk powder increased 2.3% to $3,458 mt or $1.57 per pound.
Average Class III Prices:
| 3 Month: | $18.16 |
| 6 Month: | $16.57 |
| 9 Month: | $16.83 |
| 12 Month: | $16.88 |
Cheese:
Cheese seems to be somewhat directionless. Trading is subdued as more business is being done through other channels in the country. There is limited need to come to the spot market to purchase supply. Unlike last year, there is much more available to purchase to fill retail demand as well as government demand. Manufacturing is strong as plants are trying to utilize increasing milk receipts, limiting the amount of milk that needs to be sold on the spot market.
Butter:
Price made a nice rebound Tuesday, but most believe this will be short-lived and follow the pattern of many price bounces since July of 2020. Sellers may try to take advantage of the higher price Wednesday as they continue their desire to move supply as quickly as possible. The indication is that inventory continues to build.
Outside Markets Summary:
March corn fell 6.25 cents, closing at $5.43. March soybeans fell 10.50, closing at $13.5475 with March soybean meal down $2.50 per ton, closing at $428.00. March wheat declined 6.25 cents, ending at $6.4475. February live cattle gained $1.10, closing at $115.97. March crude oil gained $1.21 per barrel, closing at $54.76. The DOW jumped 476 points, closing at 30,687 while the NASDAQ gained 209 points, ending at 13,613.
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