MILK:
Class III milk futures showed quite a bit of volatility Tuesday as contracts seesawed up and down, finally settling with most contracts higher. The weakness of barrels did not change the bullish minds of traders. With the continued strength of Class III futures, there are more predictions being released as far as the potential for milk prices. Milk production in other countries is down due to farmers across the world struggling with higher costs of production. This is taking place at a time when demand for dairy is increasing. Some of this is due to consumers wanting a nutritious diet due to the concern over COVID and dairy fits that very well. A healthier lifestyle may reduce some of the impacts from COVID and is certainly a positive outcome from the pandemic. The problem for farms is that the pandemic has increased the costs of many things that are used in the production of milk, leaving us with trading dollars for dollars. Higher milk prices are offset by higher feed prices, leaving farms in no better condition. This is what has impacted milk production and has caused concern for buyers of dairy products. To what extent this will push milk prices is difficult to predict. Corn futures fell Tuesday in response to a slight change in weather forecast for South America with chances of rain increasing over the next two weeks. This triggered some liquidation in futures as profits were being taken from the market as well as farmers selling some of the corn they have in storage due to the strong prices.
AVERAGE CLASS III PRICES:
| 3 Month: | $19.55 |
| 6 Month: | $19.85 |
| 9 Month: | $19.93 |
| 12 Month: | $19.95 |
CHEESE:
Cheese buyers have been aggressive and remain that way even though holiday demand is satisfied. Buyers are looking ahead and are concerned over supplies as time moves forward. It does seem farm profitability is not going to be any better due to continued problems in many sectors of the economy. Prices of goods and services are expected to increase again with the coming of the new year. This may result in more farms liquidating and milk supply tightening.
BUTTER:
The strength of butter has been somewhat of a surprise throughout the holiday period. Buyers are not blinking an eye at the higher prices and continue to aggressively purchase supply. They seem to be outbidding each other to get supply at whatever the cost. The market is beginning to get to feel out of control. Strong demand will continue to push price higher.
OUTSIDE MARKETS SUMMARY:
March corn fell 10 cents, closing at $6.0475. January soybean declined 3.25 cents, closing at $13.5925 with January soybean meal gaining $1.10 per ton, closing at $415.90. March wheat fell 20.50 cents, closing at $7.8350. December live cattle jumped $1.17, ending at $138.47. February crude oil gained $0.48, closing at $76.05 per barrel. The DOW gained 96 points, closing at 36,398 while the NASDAQ declined 90 points, closing at 15,782.
