MILK:
Class III milk futures moved higher Wednesday after the selling pressure Tuesday. Underlying cash did increase Tuesday, but futures declined. Wednesday, cash increased and futures gained as now they are more in line with cash. Class IV futures were lower in response to further weakness of butter and nonfat dry milk. The January Federal Order class prices were announced Wednesday with all classes showing increases. The Class II price was $22.83, an increase of $2.99 from January 2021. Class III price was $20.38, up $2.20 from a year ago. Class IV price was $23.09, up $3.21 from a year ago. The Class IV price $2.71 higher than Class III is a new record for the price spread. The Global Dairy Trade Auction took place Tuesday with the trade-weighted average up 4.1% from the previous event. This puts the average price at an eight-year high. Anhydrous milk fat increased 1.4% to $6,800 per metric ton or $3.08 per pound. Butter increased 3.3% to $6,359 per metric ton or $2.88 per pound. Buttermilk powder jumped 9.7% to $4,009 per metric ton or $1.82 per pound. Cheddar cheese increased 2.4% to $5,684 per metric ton or $2.58 per pound. Skim milk powder increased 2.1% to $4,051 per metric ton or $1.84 per pound. Whole milk powder increased 5.8% to $3,324 per metric ton or $1.96 per pound.
AVERAGE CLASS III PRICES:
| 3 Month: | $21.14 |
| 6 Month: | $21.27 |
| 9 Month: | $21.19 |
| 12 Month: | $20.91 |
CHEESE:
Cheese prices are attempting to regain the losses of a couple weeks ago. Prices still have a way to go and may have a difficult time reaching that level in the near term. Overall cheese demand is holding well and is seeing an increase in demand for pizza cheese due to the upcoming Super Bowl. Demand may slow a little after that as the market settles down to regular winter demand. Buyers may be a little less aggressive as they are purchasing ahead for expected demand rather than waiting to buy seasonally.
BUTTER:
It is interesting that buyers have not stepped up to purchase supply more aggressively. It has been a significant decline of price, but that has not been met with frenzied buying. Buyers have purchased ahead, which has reduced their need to buy to fill current orders. Nonfat dry milk price has also shown some weakness but not to extent that butter has.
OUTSIDE MARKETS SUMMARY:
March corn fell 12.25 cents, closing at $6.2250. March soybeans jumped 16.75 cents, closing at $15.4525, with soybean meal down $0.90 per ton, closing at $435.10. March wheat fell 14 cents, ending at $7.55. March crude oil gained $0.06, closing at $88.26 per barrel. The Dow gained 224 points, closing at 35,629, while the NASDAQ gained 72 points, closing at 14,418.
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