MILK
January and February Class III contracts have given back some of their recent gains, while March and later contracts have given back all and then some. It has been quite some time since we have seen Class III futures above Class IV futures, but currently, January is showing that. Cheese and butter prices remained unchanged Wednesday, which increased selling pressure on futures, as there is concern the recent strength may have come to an end. The impact of the recent winter storm and cold weather has not yet been completely realized, but the action today indicates traders do not think it has had a large or long-lasting impact. The movement of milk into the Southeast had been hindered, but that is back up and moving again. It is the second consecutive week spot milk had been discounted upward of $10 under class. This may continue for another week, but then the large discounts should become quite a bit less. Schools will be back in session with more milk moving to bottling to supply school accounts.
AVERAGE CLASS III PRICES
| 3 Month: | $19.56 |
| 6 Month: | $19.19 |
| 9 Month: | $19.38 |
| 12 Month: | $19.57 |
CHEESE
Reports are that cheese demand is slowing, as the holiday demand is past and the end of the year is near. Retail is concerned inflation and economic uncertainties could reduce demand during the first quarter of 2023 and longer. If milk production slowly increases, prices could move lower than expected. Cheese inventories are historically large but manageable. However, increasing inventory next year could have a lot of cheese available to the market.
BUTTER
Demand for butter has slowed, affecting price. The recent decline has been substantial but not unheard of. The most recent decline similar to this year was at the end of 2015 when price fell further into the end of the year than it has so far this year. Churning has been active, which is beginning to rebuild inventory. Retail outlets will wait to see the level of demand through the holidays before reordering supply.
OUTSIDE MARKETS SUMMARY
March corn gained 8 cents, closing at $6.8275. January soybeans jumped 24.25 cents, closing at $15.0650, with January soybean meal up $14.50, ending at $466.30 per ton. March wheat gained 11 cents, closing at $7.8550. December live cattle gained $0.62, ending at $157.45. February crude oil declined $0.57, closing at $78.96 per barrel. The Dow declined 366 points to close at 32,876, while the NASDAQ declined 140, closing at 10,231.
