MILK
Class III futures closed substantially lower initially, succumbing to the pressure of being overdone to the upside Thursday and then from the pressure of declining spot prices. Class III futures closed lower from the week, while Class IV futures were mixed compared to last Friday. It certainly has been a volatile week with milk futures fluctuating wildly over the second half of the week. Underlying fundamentals have not changed much. However, the perception of a change in fundamentals produced extreme volatility. The January Milk Production report fueled the bullish attitude of traders for tightening milk supply as the year progresses. Disappointment Friday stemmed from the decline of spot prices. January dairy cattle slaughter was somewhat interesting. USDA reported 260,800 head of dairy cattle were slaughtered during the month. This was a decline of 7,000 head from the previous month and a decline of 16,500 head from the previous year. Yet, USDA indicated cow numbers declined 5,000 head in December. It will be interesting where we go from here.
AVERAGE CLASS III PRICES
| 3 Month: | $21.77 |
| 6 Month: | $22.03 |
| 9 Month: | $21.96 |
| 12 Month: | $21.63 |
CHEESE
For the week, blocks declined 4.25 cents with four loads traded. Barrels declined 3.50 cents with six loads traded. Dry whey declined 3 cents with four loads traded. It was a holiday-shortened week, but trading activity was unusually light. The surprise was the weakness in cheese seen Friday rather than a renewed interest in purchasing due to the potential of a tightening milk supply. The spot market is likely going to be choppy as buyers and sellers take care of business.
BUTTER
For the week, butter fell 10.25 cents with 15 loads traded. Grade A nonfat dry milk increased a penny with 27 loads traded. Churning has been active, which has allowed for demand to be satisfied as well as inventory to build. Price may have a difficult time moving back near or surpassing the highs that have been established this year. Buyers certainly were not aggressive today even after a significant decline was seen in milk production in January and the potential for tightening supply.
OUTSIDE MARKETS SUMMARY
March corn fell 35.50 cents, closing at $6.5950. March soybeans fell 71.25 cents, ending at $15.9025, with March soybean meal down $16.60 per ton, closing at $448.30. March wheat fell 83 cents, closing at $8.43. February live cattle declined $1.25, ending at $139.27. April crude oil declined $1.22, ending at $91.59 per barrel. The Dow jumped 835 points, closing at 34,059, while the NASDAQ gained 221 points, closing at 13,695.
