MILK:
Class III milk futures closed higher, but with not quite the strength seen yesterday. However, Class IV futures substantially outpaced Class III with February and March using some of the expanded price limit today, closing 89 cents higher in February and 81 cents higher in March at $22.40 and $22.36 respectively. February Class III futures gained 56 cents to close at $22.35. The excitement seems mainly based on the potential for increased exports to Canada under the direction of the USMCA panel findings that Canada had not been fulfilling the agreement in regard to tariff rate quotas, as stated in the USMCA provisions. The Canadians have 30 days to correct this policy. This could potentially open the way for more export potential to Canada and increase demand for dairy products. The proof will be if import demand will increase. The potential problem is that pushing prices too high in anticipation could limit the desire to purchase dairy products. USDA released the December Federal Order class prices today which showed a Class II price of $19.84, an increase of $1.44 from November. Class III price increased $0.33 from the previous month to $18.36. Class IV was announced at $19.88, up $1.09. USDA will release the November Dairy Products report tomorrow.
AVERAGE CLASS III PRICES:
| 3 Month: | $21.59 |
| 6 Month: | $21.31 |
| 9 Month: | $21.07 |
| 12 Month: | $20.80 |
CHEESE:
Cheese prices are strong with buyers continuing to increase ownership of supply. It may be nearing a point of price resistance or where sellers will be more willing to move product. There were no unfilled bids remaining at the close of barrel trading. However, there is no indication of prices being at a plateau. As long as both domestic and international demand remail strong, prices may continue higher.
BUTTER:
Butter continues to outpace cheese by leaps and bounds. The price only has to increase 3 cents more to move back to the highest levels since 2015. Supplies are tighter but there currently is no shortage. Price may be reaching a level at which plants may begin to move more of their inventory, rather than hold onto it in case of price weakness.
OUTSIDE MARKETS SUMMARY:
March corn fell 7.25 cents to close at $6.0225. January soybeans gained 5.50 cents, ending at $13.8425, with January soybean meal down $3.50 per ton to close at $424.10. March wheat was down 9.25 cents to close at $7.6075. February live cattle was down $0.57, closing at $137.25. February crude oil gained $0.86 to end at $77.85 per barrel. The Dow fell 393 points, ending at 36,407 points, while the NASDAQ fell 523 points, closing at 15,100 points.
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