MILK
It has been a very strong week so far for milk futures as traders turned more optimistic. The increase of barrel cheese price continues to support the market. There remains sufficient milk for both bottling and manufacturing needs. However, some attention is being turned toward the possibility of further culling to the dairy herd resulting in lower milk output. The impact of this may not be as great during the time of year in which demand is generally slower. However, the fear of lower production next year could cause buyers to purchase more aggressively now rather than wait until later. They would rather pay storage costs than purchase product at higher prices in the future. The market seems to have found strong support from the announcement of USDA to provide up to $450 million to purchase food under two separate programs designed to expand local and regional markets and place an emphasis on purchasing from historically underserved farmers and ranchers. This has provided some support to the market, but it may be a bit premature as eligible state and local governments have until April 5, 2022, to apply for rewards under the program. The period of performance for these grants will be up to two years after they are approved. This is for many types of food and not just dairy products. It will take some time to get this figured out and implemented and will not be something that will take place immediately.
AVERAGE CLASS III PRICES
| 3 Month: | $19.32 |
| 6 Month: | $19.36 |
| 9 Month: | $19.36 |
| 12 Month: | $19.35 |
CHEESE
Barrel cheese price has been strong recently but still has a way to go before it can reach back to the level it was on Oct. 22. Blocks are at the top of the trading range that price has been in for over a year. Yet, prices are moving substantially higher in anticipation of a continued strong market through the end of the year.
BUTTER
Butter seems to have uncovered renewed buying interest. Strong demand and lower inventory leave buyers willing to purchase even for the longer term. Buyers are not concerned about having to pay storage costs for an extended period in order to make sure they will have product when it is needed. Inventory will end the year quite a bit lower than last year.
OUTSIDE MARKETS SUMMARY
December corn gained 2.75 cents, ending at $5.8625. January soybeans fell 11.25 cents, closing at $12.5025, with December soybean meal down $0.80, ending at $358.90 per ton. December wheat gained 2.25 cents, closing at $7.9925. December live cattle gained $0.05, ending at $138.22. January crude oil gained $2.24, ending at $71.73 per barrel. The Dow gained 492 points, closing at 35,719 points, while the NASDAQ gained 462 points, closing at 15,687.
