MILK:
Class III milk futures posted some strong gains in nearby months again with February reaching a high of $20.90 but was not able to close at that level. Markets will be open for a full day Friday with anticipation that February could move above $21.00 at some point. Class IV futures have numerous contracts trading above $21.00 due to the strong butter market. What was interesting Thursday is both butter and nonfat dry milk spot prices increased, but Class IV futures in the second and third quarters declined with June and July posting double-digit losses. USDA released the November Agricultural Prices report Thursday which resulted in an income over feed price of $9.14 and the highest income over feed price since November 2020. The average corn price was $5.27, an increase of $0.25 per bushel from October. The Central Illinois soybean meal price was $358.73, an increase of $33.30 per ton from October. The premium/supreme hay price was $246 per ton, a decrease of $1.00 per ton from October. This is the first month the calculation for the income over feed is using only the premium/supreme hay price rather than a blend price. The All-milk price was $20.80, up $1.10 per cwt from October. This results in a Dairy Margin Coverage program payment of $0.36 for those who chose the $9.50 level and who have not reached the maximum of 5 million pounds of milk for the year.
AVERAGE CLASS III PRICES:
| 3 Month: | $19.81 |
| 6 Month: | $20.14 |
| 9 Month: | $20.17 |
| 12 Month: | $20.14 |
CHEESE:
Demand for cheese is steady through retail outlets. There continue to be delays in deliveries with retail buyers compensating by purchasing ahead of time. With the increase of COVID-19 again, this is not going to change despite the CDC reducing the quarantine time now to only five days. Demand from the food service industry has slowed and may slow further if people remain at home more during the winter. Buyers continue to bid up for cheese, which may be tied with the end of the year inventory levels and positioning for the first quarter.
BUTTER:
Butter price pushed back to the highest level it has been since May 22, 2018. Declining inventory and lower production coupled with strong domestic and international demand has propelled price higher. The magnitude of the increase could indicate the market may run out of steam soon once buyers feel they have sufficient supply on hand for the time being.
OUTSIDE MARKETS SUMMARY:
March corn declined 9.50 cents, closing at $5.96. January soybeans fell 28.75 cents, ending at $13.2775, with January soybean meal down $1.80 per ton, closing at $413.60. March wheat declined 8 cents, ending at $7.7975. December live cattle slipped $0.35, ending at $139.05. February crude oil declined $0.10, ending at $76.46 per barrel. The Dow declined 91 points, closing at 36,398, while the NASDAQ declined 25 points, closing at 15,742.
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