MILK:
Milk futures have been diverging much of the week with Class III contracts declining, while Class IV contracts have been advancing. The strength of butter and nonfat dry milk has been incredible, resulting in continued strength and support for Class IV futures. It is like we are seeing a reversal of what Class III and Class IV futures did in 2020. At the close Friday, February Class IV futures were about $3.50 higher than February Class III. Later Class IV contracts for Class IV futures are about $2.50 higher than Class III. This is the first time I have seen this much of a difference between Classes III and IV with Class IV being higher. Generally, Class IV futures are near or lower than Class III. It is unclear what impact this will have on Producer Price Differentials. Milk production is steady over much of the country with sufficient milk for both manufacturing and bottling needs. Some milk has had to be shifted around due to employee shortages at some plants, while other plants welcome extra milk to keep plants operating on full schedules. Spot milk in the Midwest this week has been running $1 to $1.50 below class. USDA will release the December Milk Production report on Monday.
AVERAGE CLASS III PRICES:
| 3 Month: | $20.86 |
| 6 Month: | $21.03 |
| 9 Month: | $20.96 |
| 12 Month: | $20.75 |
CHEESE:
It certainly has not been a good week for cheese prices. Blocks fell 11.25 cents with four loads traded. Barrels declined 14.75 cents with two loads traded. This was quite a change from the previous few weeks. There was quite a bit more trading activity as prices were increasing. However, this week, buyers stepped back with some days having no buyers show up during spot trading. Dry whey increased 3 cents with two loads traded. Dry whey price moved to a new record high at 80 cents.
BUTTER:
Butter price increased 21 cents this week, moving to the highest price since Sept. 28, 2015. The record high is $3.14 set back on Sept. 14, 2015. It seems like the market is heading to challenge that high. With the increase this week, there were 32 loads traded. Grade A nonfat dry milk remained unchanged with seven loads traded. USDA will release the December Cold Storage report on Monday.
OUTSIDE MARKETS SUMMARY:
March corn gained 5.25 cents, closing at $6.1625. March soybeans declined 11.25 cents, closing at $14.1425, with March soybean meal down $8.10, closing at $392.70 per ton. March wheat declined 10.25 cents, ending at $7.80. February live cattle declined $0.40, closing at $137.92. March crude oil declined $0.41, ending at $84.14 per barrel. The Dow fell 450 points, closing at 34,265, while the NASDAQ fell 385, closing at 13,769.
