MILK
Class III milk futures were under significant pressure as underlying cash provided no support. A steady block cheese price should have limited some losses, but traders did not seem to care as the attitude has turned more bearish. November milk production is up 1.3% above a year ago and strong milk production per cow will keep milk supply plentiful. Farms may not increase culling through the winter unless milk prices decline substantially. Lower milk prices will not be felt until February and March when milk checks for January and February are received. That may trigger some culling decisions but more likely it may take longer as feed supplies are sufficient. Class IV prices are better but those may be trimmed as well due to the weakness of butter. Holiday demand for dairy products is finished with buying now confined to regular demand of which the level may not be known until after the holiday season. The substantial rise of Covid in China may reduce their imports of dairy products for a while, but that may not have a large impact on overall exports.
AVERAGE CLASS III PRICES
| 3 Month: | $19.26 |
| 6 Month: | $19.20 |
| 9 Month: | $19.46 |
| 12 Month: | $19.65 |
CHEESE
Barrel cheese price fell to the lowest level in about a year which is both surprising and concerning. It is surprising that it has shown this much weakness prior to the end of the year and concerning as buyers have little interest in purchasing as supplies are larger and demand is lighter.
BUTTER
Price may have a greater difficulty bouncing due to much of the holiday demand filled with buyers anticipating further weakness into the first quarter of the year. Increasing butter production may begin to build inventory but certainly not by large volume as overall domestic and international demand is strong. Price falling to the lowest level since February 25 is significant and may keep buyers on the sidelines.
OUTSIDE MARKETS SUMMARY
March corn gained 4.75 cents closing at $6.52. January soybean gained 17.75 cents closing at $14.7850 with January soybean meal up $3.30 per ton closing at $452.40. March wheat gained 2 cents ending at $7.5050. December live cattle slipped $0.22 closing at $155.05. January crude oil gained $0.90 closing at $76.09 per barrel. The Dow gained 92 points closing at 32,850 while the Nasdaq increase one point closing at 10,547.
