Tuesday Closing Diary Market Update - USDA Raises Milk Production

MILK

Class III milk futures declined for the second day as the bullish buying that erupted from higher cheese prices tempered, along with the idea that increased purchasing from the government may not be sufficient to push prices higher as it did last year. Milk futures could fall back to the levels they were earlier last week unless underlying cash supports. USDA increased its estimate of milk production for 2020 by 200 million pounds with the anticipated production reaching 223.1 billion pounds. It increased its estimate for this year to 227.4 billion pounds, up 700 million pounds from its estimate last month. Commercial ending stocks on a fat basis were raised 800 million pounds to 16.2 billion pounds, while exports were raised 400 million pounds. Commercial ending stocks on a skim-solids basis were raised 300 million pounds, while exports were raised 200 million pounds. The Class III average price was reduced $0.30 to $16.60 from the January estimate. Class IV was reduced $0.40 to an average of $13.70, down from $14.10 last month. The all-milk price was lowered $0.40 to an average of $17.15 for this year.

AVERAGE CLASS III PRICES

3 Month:	$16.18
6 Month:	$16.75
9 Month:	$17.01
12 Month:	$17.05

CHEESE

USDA lowered the average expected cheese price this year by 4.50 cents per pound to $1.6950. If this comes to fruition, it will be nearly 23 cents per pound lower than last year. Dry whey price was increased 3 cents to an expected average of 48 cents. Whey would be nearly 12 cents per pound higher than it was in 2020.

BUTTER

Butter price took the largest hit as USDA dropped the average expected price 15 cents to $1.4550 per pound. This would be about 13 cents lower than the average in 2020. Nonfat dry milk was raised 2.50 cents to $1.1250 per pound and would be about 8 cents per pound higher than 2020.

OUTSIDE MARKETS SUMMARY

March corn fell 7.50 cents, closing at $5.5625. March soybeans jumped 14 cents, ending at $14.0175, with March soybean meal up $2.10 per ton, closing at $438.70. March wheat declined 6.25 cents, closing at $6.4950. February live cattle gained $0.87, ending at $117.45. March crude oil gained $0.39, ending at $58.36 per barrel. The Dow slipped 10 points, closing at 31,376, while the NASDAQ gained 20 points, ending at 14,008.