MILK
The January Federal Order class prices showed minor gains from December prices. The Class II price was $14.18, up $0.17 from the previous month, but $2.87 lower than a year ago. Class III price was $16.04, up $0.32 from the previous month, but $1.01 lower than a year ago. Class IV price increased $0.39 from December to the price of $13.75. This was $2.90 lower than January 2020. Traders had anticipated a Class III price $0.08 higher and a Class IV price $0.05 higher. Probably the least final price variations that we have seen in a while due to the volatility making in difficult for traders to estimate final prices accurately. Class III milk futures moved the opposite as they had been moving the past few days. Contracts through May were lower while later contract were higher. This was due to the divergence of spot cheese prices Wednesday with the weakness of blocks offsetting the gain of barrels. March closed at the lowest price since Aug. 26. Demand for bottled milk has been relatively stable. Increasing milk supply is moving more to manufacturing. There is hope demand from food service will improve as more restaurants begin increasing customer business. However, that will take a while as customers may be slow to return to eating out as much as they had been prior to the pandemic. USDA will release the December Dairy Products report Thursday.
AVERAGE CLASS III PRICES
| 3 Month: | $15.98 |
| 6 Month: | $16.49 |
| 9 Month: | $16.79 |
| 12 Month: | $16.86 |
CHEESE
Spot milk prices in the Midwest are weaker than usual for this time of year as plants are diverting increasing volume of milk to other plants that have processing room. Cheddar cheese production is active as there is good demand to supply orders as well as to rebuild aging programs. Spot market prices may settle in a choppy, sideways trading pattern for the near term as buyers and sellers take care of business at prices that may be attractive for both.
BUTTER
Churning is active as plants utilize available cream supplies. Many plants are using their regular supply of cream and not turning to the spot market to purchase any extra. Demand is being met with excess moving to storage. The result is continued increasing inventory. Higher trending butterfat price on the world market may provide some support as export interest may increase.
Outside Markets Summary
March corn jumped 9 cents, closing at $5.52. March soybeans jumped 16.50 cents, closing at $13.7125, with March soybean meal up $7.50 per ton, closing at $435.50. March wheat gained 3.50 cents, closing at $6.4825. February live cattle declined $0.50, ending at $115.47. March crude oil gained $0.93, closing at $55.69 per barrel. The Dow increased 36 points, closing at 30,724, while the NASDAQ slipped 2 points, closing at 13,611.
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