MILK:
Milk futures were under pressure as the market overshot itself Monday and Class III contracts had to wait until either underlying cash catches up or spot prices decline. Overnight trade is likely to show higher prices in anticipation of cheese prices holding or possible finding further support. Income over feed for the month of December was $9.53 which eliminated any payment under the Dairy Margin Coverage program. The increase of corn, soybean meal price and premium/supreme hay was more than offset by the increase of the all-milk price. Corn increased 20 cents per bushel, soybean meal increased $40.80 per ton and premium/supreme hay price increased $7.00 per ton. This was offset by the increase of the all-milk price of $1.00 per cwt. This is the first time since November 2020 that there had not been a payment for those who chose the $9.50 price level. The average income over feed price for 2020 was $9.66 while the average price for 2021 was $7.08. USDA released the Bi-annual Cattle Inventory report Monday, which showed milk cow inventory at 9.375 million head on Jan. 1. This was 1% less than a year ago. Milk replacement heifers totaled 4.506 million head, down 3% from a year earlier. The ratio of heifers to cows is 48.1%, down .06% from the previous year. The ratio has shown a steady decline since January 2016.
AVERAGE CLASS III PRICES:
| 3 Month: | $20.04 |
| 6 Month: | $21.14 |
| 9 Month: | $21.09 |
| 12 Month: | $20.83 |
CHEESE:
It is difficult to anticipate just how much strength cheese prices will have. Buyers have tried to take advantage of the lower prices, but those lower prices have been slipping away with little business being done. Prices could be at risk of moving above the level that buyers might be willing to pay at the present time. Cheese inventory remains significantly higher than a year ago and is likely to increase much of the first half of the year if it follows the seasonal tendency.
BUTTER:
The weakness of butter Tuesday was a bit of a surprise as price really did not bounce very much. Price fell below the level it had fallen last week which could open the door for buyers to step back again in anticipation of still lower prices. Butter price in the Global Dairy Trade auction increased 3.3%, indicating strong demand from the international market.
OUTSIDE MARKETS SUMMARY:
March corn gained 8.75 cents, closing at $6.3475. March soybeans jumped 38 cents, closing at $15.2825 with March soybean meal up $17.10 per ton, closing at $436.00. March wheat increased 7.75 cents, ending at $7.69. February live cattle gained $0.72, closing at $140.30. March crude oil gained $0.05 per barrel, closing at $88.20. The DOW gained 273 points, closing at 35,405 while the NASDAQ gained 106 points, closing at 14,346.
