MILK:
It certainly has been a volatile week in dairy markets as traders react significantly to swings in underlying cash. If prices are trying to find a balance between supply and demand, they certainly seem to have difficulty finding it. The question this week has been whether the markets are overdone to the downside or to the upside. Class III futures have been able to regain much of the early losses of the week. However, they have a long way to go before regaining the losses of the past two weeks. It is not the same for Class IV futures even though butter prices fell dramatically this week. Milk production has been mainly steady to slightly higher in some areas. Demand is holding well for fluid milk. Cheese demand for pizza is strong due to the playoffs and the upcoming Super Bowl. There continue to be issues with transportation and processing ability due to the continued impact from COVID. Grain prices remain strong this week as concern over the impact of a conflict in Ukraine might have an impact on international grain shipping. Ukraine exports a good portion of corn and wheat to the world market. Higher feed prices will have an impact on farm profitability.
AVERAGE CLASS III PRICES:
| 3 Month: | $20.64 |
| 6 Month: | $21.02 |
| 9 Month: | $21.04 |
| 12 Month: | $20.86 |
CHEESE:
For the week, blocks declined 1.75 cents with five loads traded. Barrels declined 7 cents with five loads traded. Dry whey price increased 4 cents with four loads traded. Dry whey continues to make new highs, providing support to Class III prices. Dry whey has not reached a level at which demand is being affected or any significant switch to alternatives as was the result in 2007. Demand for some types of cheese may slow more noticeably in the next few weeks as football will be finished for another season.
BUTTER:
The rebound of butter was nice to see Friday, but the gain was minor in relationship with the loss of the week. Butter fell 39.50 cents this week with 24 loads traded. Most of the loads were traded Friday. Grade A nonfat dry milk declined a penny with 17 loads traded during the week. Cream is becoming increasingly available for butter production. Churning activity is increasing slowly where plants are not hindered by employee shortages or trucking delays. Many plants have been able to work through that and keep production steady.
OUTSIDE MARKETS SUMMARY:
March corn gained 10.75 cents, closing at $6.36. March soybeans jumped 21.75 cents, closing at $14.70, with March soybean meal up $6.50 per ton, closing at $411.20. March wheat gained 9.25 cents, closing at $7.8625. February live cattle gained $0.87, closing at $138.70. March crude oil increased $0.21, closing at $86.82 per barrel. The Dow jumped 565 points, closing at 34,725, while the NASDAQ gained 418 points, closing at 13,771.
