MILK
It has been a very strong week for milk futures with Class IV futures far outperforming Class III futures. Class IV futures are solidly above $20 from January through October. January through December Class III futures are all above $19. It is a bit surprising that milk futures are as strong as they are during this time of year. However, underlying cash strength continues to support higher prices. Milk production is holding well, considering the number of cows that have been culled over the past few months. Traders feel milk supply will tighten and are willing to buy futures more aggressively with that anticipation. It is uncertain whether culling continues to remain heavy or if the potential for higher milk prices is slowing that desire. Replacements continue to bring good prices with some tightness noted in the heifer market. USDA has changed the Dairy Margin Coverage program income-over-feed price calculation using only the price of premium/supreme hay rather than a blend of alfalfa hay and the supreme/premium hay price. This change will be made retroactive to January 2020. This will result in the addition of $3.19 per cwt that will be paid as a result of the change. Going forward, it will add an average of 21 cents per cwt to each month in which there is a DMC payment. October exports slipped for the first time all year on a year-over-year basis. Total dairy exports declined 0.9% compared to October 2020, while the value of exports increased 17.3% to a total of $660.0 million.
Average Class III Prices
| 3 Month: | $19.46 |
| 6 Month: | $19.54 |
| 9 Month: | $19.56 |
| 12 Month: | $19.52 |
CHEESE
Export sales of cheese during October were very strong totaling 35,618 metric tons, up 43.7% from October 2020. Year-to-date exports are up 11.3% compared to the same period last year. Dry whey product exports declined with a loss of 10.2%, totaling 49,891 metric tons. It has been a long time since dry whey exports declined from the previous year. Year-to-date exports are still up 15.5%. For the week, block cheese declined 0.75 cent with six loads traded. Barrels increased 7.75 cents with eight loads traded. Dry whey price increased 1.50 cents with no loads traded.
BUTTER
Export sales of butter remained very strong in October with an increase of 107.1% above October 2020. Volume totaled 5,134 metric tons. Year-to-date exports are 132.5% above the same period last year. Skim/milk powder/nonfat dry milk exports declined 12.3%, totaling 66,862 metric tons, with year-to-date exports up 10.1%. Whole milk powder exports declined 26.0%, totaling 2,284 metric tons, with year-to-date exports up 5.3%. For the week, butter price jumped 12 cents with 31 loads traded. Grade A nonfat dry milk increased 6.25 cents with 19 loads traded.
OUTSIDE MARKETS SUMMARY
December corn closed unchanged at $5.8850. January soybean gained 3.25 cents, closing at $12.6775, with December soybean meal up $9.10 per ton, closing at $377.90. December wheat gained 8.50 cents, closing at $7.82. December live cattle gained $0.12, ending at $136.85. January crude oil gained $0.73, ending at $71.67 per barrel. The Dow gained 216 points, closing at 35,971, while the NASDAQ gained 113, closing at 113 points
