Thursday, January 20, 2022

Thursday Closing Dairy Market Update - February Class I Price Reaches $21.64

MILK:

It has been a wild ride for Class III futures this week. New contract highs were made a week ago, only to fall back to price levels last seen at the beginning of the year. The fear factor over milk supply pushed prices higher only to run its course with the concern over tight supply ebbing a bit. This does not mean milk prices and underlying cash prices are going to fall apart, but the market has reality setting in again for the time being. The market is trying to balance supply with demand. With the indication of some slowing of cheese demand and some expansion of cow numbers again, there is a little less fear over milk supply. Now, the increase of cow numbers may not be very evident over the next few months, as cows might change farms, keeping the same numbers in the nation's dairy herd. The reality may be that cow number will stop declining initially before possibly increasing again. The February Class I price is $21.64. This is an increase of $1.93 from January and an increase of $6.10 from February 2021.

AVERAGE CLASS III PRICES:

3 Month: $20.93
6 Month: $21.07
9 Month: $20.97
12 Month: $20.75

CHEESE:

Food service demand has slowed somewhat due to the surge of COVID cases, but the rise in cases seems to be settling down as the infections may now be over the hump. This might result in increased demand from the restaurants and meeting venues. Retail sales are good but showing signs of slowing as buyers are comfortable with current supplies for the time being. Delivery of cheese continues to face delays, which is the reason orders are being placed significantly ahead of time in order to assure product availability when desired.

BUTTER:

Price keeps reaching higher as butter supply is in a different position than cheese. USDA will release the December Cold Storage report on Monday, which is expected to show supply at the end of the year substantially lower than the previous year. Churning activity is increasing to some extent as more cream is available. Buyer resistance still has not been reached as bulk butter supply remains tight.

OUTSIDE MARKETS SUMMARY:

March corn gained 0.50 cent, ending at $6.11. March soybeans jumped 34.50 cents, closing at $14.2575, with March soybean meal up $2.50 per ton, closing at $400.80. March wheat declined 6.25 cents, ending at $7.9025. February live cattle slipped $0.22, closing at $138.32. March crude oil declined $0.25, ending at $85.55 per barrel. The Dow declined 313 points, closing at 34,715, while the NASDAQ declined 186 points, closing at 14,154.




Thursday Closing Dairy Market Update - Class III Milk Futures Close Lower

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