MILK
It certainly was an interesting day with almost no trading activity or price direction overnight turning into stronger prices through the time of market settlement and then further gains in trading activity into the close of electronic trading. This may sound odd to many of you until you understand how the futures markets settle each day. The CME settles futures contracts for those markets that trade until 4 p.m. Central Time shortly after 2 p.m. Central Time. So, where futures range near that time is where the contracts are settled. However, the market still trades for another 2 hours before it completely closes. Wherever futures prices are at the final closing bell, prices close at the level they settled at 2 p.m. June and July contracts were trading over 50 cents higher at the end of the day but settled 18 cents and 19 cents higher. What generally happens is that overnight markets usually begin about where trading finished at the end of trading, so it really does not make much difference. Thus, milk futures most likely will begin trading where they left off, reflecting the late strength. USDA will release the World Agricultural Supply and Demand report Wednesday, showing the estimates for milk production, milk prices and dairy product prices. It will also release estimates for 2022.
AVERAGE CLASS III PRICES
| 3 Month: | $19.09 |
| 6 Month: | $19.25 |
| 9 Month: | $19.02 |
| 12 Month: | $18.79 |
CHEESE
The divergence of cheese prices Tuesday did little to change the underlying cash calculation. But there is much anticipation of cheese prices increasing based on the movement of Class III futures at the end of the day. So far, there have been no announcements from USDA related to anything in the dairy industry. Cheese production continues to hold well, satisfying current demand.
BUTTER
Further strength was uncovered in spot butter Tuesday as buyers needed to cover some orders. The foodservice pipeline needs to be kept satisfied. There is sufficient butter available in storage, but some buyers prefer fresh butter rather than stored butter. However, stored butter still can be sold on the daily spot market if it was produced after Dec. 1. Strong demand may be able to begin reducing some of the large inventory, getting supply more in line with demand.
OUTSIDE MARKETS SUMMARY
May corn gained 11.50 cents, closing at $7.5950. May soybeans gained 17.50 cents, closing at $16.3750, with May soybean meal up $5.10 per ton, closing at $449.50. May wheat jumped 17.25 cents, ending at $7.5975. June live cattle gained $0.40, closing at $118.62. June crude oil closed $0.36 higher at $65.28 per barrel. The Dow fell 474 points to 34,269 with the NASDAQ 12 points lower at 13,389.
