MILK
Traders gained more confidence to buy into Class III futures when they saw block cheese price increasing. The prospect of a tightening milk supply as time progresses has turned traders more bullish. That tightening of supply may not happen over the next few months if demand decreases seasonally. It is interesting that there are more reports of milk plants looking for more milk and are actively trying to recruit new patrons in some cases. Some plants are trying to court producers from other plants to make up for lost supply. They do not want to be dependent on purchasing milk from the spot market. There have been some plants that have indicated to producers that they can add cows and expand if they so desire. This was inevitable as production levels are affected by outside events that will cause the ebb and flow of milk supply. The cycle now might be less milk output for a period with the result being more incentive to increase milk production. Monday was the first day to sign up for the Dairy Margin Coverage program for 2022. Sign-up will continue through Feb. 18. Those who wish to increase their production history will need to do that before signing up for the 2022 program.
AVERAGE CLASS III PRICES
| 3 Month: | $19.57 |
| 6 Month: | $19.65 |
| 9 Month: | $19.65 |
| 12 Month: | $19.59 |
CHEESE
The divergence of cheese prices favored blocks, which is what traders capitalized on. One has to wonder whether block price will achieve $2 before the end of the year. The current strength may be the result of fill-in buying for the holidays requiring buyers to get what they need at whatever the cost. However, it is getting down to the wire to get it shipped and in place for holiday demand. Supply is adequate to meet current demand.
BUTTER
The weakness of price Monday was somewhat of a surprise. However, it is not expected that price will continue to fall back. It will remain choppy through the end of the year as buyers and sellers continue to do business. Cream supply is beginning to loosen a little, which will allow butter production to improve as time moves forward.
OUTSIDE MARKETS SUMMARY
December corn declined 4.25 cents, closing at $5.8425. January soybeans fell 23.75 cents, closing at $12.44, with December soybean meal up $6.10, closing at $384 per ton. December wheat gained 3.50 cents, closing at $7.8550. December live cattle closed $0.10 higher at $136.95. January crude oil declined $0.38, ending at $71.29 per barrel. The Dow fell 320 points, closing at 35,651, while the NASDAQ fell 217 points, closing at 15,413.
