MILK
Class III milk futures were able to regain most, if not all, of the ground that was lost Tuesday, keeping the market sideways. That is better than retesting the lows that were seen a few weeks ago. Testing those lows is not out of the question, but for now, futures are holding current price premiums in the market. September and October futures are trying to make a run at the $18 level again. It may be realized if underlying cash prices have found a bottom and traders feel optimistic about the market. Some strength Wednesday may have stemmed from the milk production report showing production not quite as high as anticipated. However, in comparison to the January 2020 gain over December 2019 and the overall growth of milk production last year, it may not push price too much higher unless current production is absorbed by demand. Annual milk production is 2020 was up 2.2% from 2019. Milk production per cow averaged 23,777, which was an incredible 382 pounds higher than 2019.
AVERAGE CLASS III PRICES
| 3 Month: | $16.09 |
| 6 Month: | $16.81 |
| 9 Month: | $17.14 |
| 12 Month: | $17.19 |
CHEESE
Block cheese had increased the spread between it and barrels to 20.75 cents. Buyers are more aggressive for blocks than barrels with that likely a result of the Food Box program and other government purchases. The cold storage report Tuesday showed American cheese stocks slipped 952,000 pounds in January in comparison to December. Even with that decline, it is the highest January inventory since 2019 and the second-highest since 1985. The last time inventory declined from December to January was in 2018. There have been some years in the past when January inventory slipped below December, so this was not an isolated event.
BUTTER
Price has been sliding back, but sellers have not been very aggressive. Inventory growth was large in January, but somewhat in line with many other years. Butter manufacturers report plenty of cream is available. Churns are active as they are trying to utilize the available cream. Inventory is building, making it unlikely the market will see much more upside price potential than it has already shown.
OUTSIDE MARKETS SUMMARY
March corn gained 5.50 cents, closing at $5.5925. March soybeans jumped 17.75 cents, closing at $14.2375, with March soybean meal up $1.80 per ton, closing at $428.30. March wheat jumped 14.50 cents, closing at $6.8025. February live cattle gained $0.95, ending at $116.57. April crude oil gained $1.55, closing at $63.22 per barrel. The Dow gained 425 points, ending at 31,962, while the NASDAQ gained 133 points, closing at 13,598.
