MILK:
Milk production is fairly flat across much of the nation, which is not unusual for this time of year. Weather has been good overall, which has kept milk per cow steady to slightly higher. The decline of cow numbers and reduced overall milk supply compared to a year ago has tightened supply more than usual at this time of year. Spot milk has been more plentiful with prices $2 to $4 under class. That is not expected to last for very long as milk will again be in demand from bottlers that supply school accounts. More milk has been moving to manufacturing due to schools being closed for the holiday period. However, demand from bottlers for school accounts is beginning to increase. Milk futures continue to show strength with support stemming from underlying cash prices. Class IV futures are about $1.00 higher than Class III which is unusual. The continued strength of butter will keep Class IV milk price higher. Reduced inventory of butter may keep it that way for a while.
AVERAGE CLASS III PRICES:
| 3 Month: | $19.63 |
| 6 Month: | $19.93 |
| 9 Month: | $19.99 |
| 12 Month: | $20.01 |
CHEESE:
Cheese manufacturers have been very busy with increased milk availability. That will begin to change now that bottlers will begin processing for school accounts. Even the increase of cheese output during the holiday has not put pressure on prices. Buyers are concerned about milk supply down the road even though current cheese inventory remains higher than a year ago. The level of cheese demand during the first quarter of the year is a question that cannot be answered. Earlier purchasing of cheese may slow once buyers feel comfortable with supply.
BUTTER:
Butter price is not slowing down its rise. Buyers are in a frenzy attempting to purchase what they can to avoid paying yet higher prices. Churning activity is increasing due to greater availability of cream. Some plants are reportedly holding inventory for future needs rather than moving it to the market as soon as it is produced. This is creating a tighter spot market causing buyer concern.
OUTSIDE MARKETS SUMMARY:
March corn gained 0.75 cent, closing at $6.0550. January soybeans declined 2.75 cents, closing at $13.5650 with January soybean meal down $0.50 per ton. March wheat gained 4.25 cents, ending at $7.8775. December live cattle gained $0.92, closing at $139.40. February crude oil gained $0.58, ending at $76.56 per barrel. The Dow closed 90 points higher at 36,489 points, while the NASDAQ fell 16 points to close at 15,766 points.
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