MILK
Class III milk futures closed lower for the day with some contracts posting double-digit losses. The weakness of barrel cheese put pressure on prices. There had been some anticipation that traders would buy into the market more aggressively due to the reduction in cow numbers from the month of November as reported on the milk production report. However, that was short-lived as underlying cash did not share the same sentiment. Buyers and sellers of cheese are doing business based on supply and demand and not what a report says. Even with the decrease in cow numbers, milk production remained higher than a year ago. The key will be what the next few reports will say once they are released. An increase in culling might take place sooner than anticipated as feed prices continue to remain high. For now, milk supply is sufficient for demand with spot milk in the Central regions still showing discounts but not as much as they had been over the past month.
AVERAGE CLASS III PRICES
| 3 Month: | $18.52 |
| 6 Month: | $18.53 |
| 9 Month: | $18.86 |
| 12 Month: | $19.07 |
CHEESE
Block and barrel cheese prices had quite a divergence this week with blocks up 12.50 cents while barrels declined 2.75 cents. The interesting aspect of this is that it created some volatility throughout the week but did little to change price from a week ago. In fact, some Class III contracts are lower than they were a week ago. There were five loads of blocks and 34 loads of barrels traded with most of the barrels traded yesterday and today. Dry whey gained 0.25 cents for the week with 18 loads traded.
BUTTER
For the week, butter declined 5 cents with three loads traded. Grade A nonfat dry milk price declined 2.25 cents with 19 loads traded. Class IV futures just could not catch a break this week closing lower for the week. Butter may have limited upside potential as buyers are not concerned over supply and have expressed limited interest in aggressively establishing forward contracts.
Outside Markets Summary
March corn gained 0.50 cents closing at $6.83. March soybeans declined 14 cents closing at $15.0950 with March soybean meal down $3.60 per ton closing at $473.50. March wheat declined 2.50 cents ending at $7.50. February live cattle closed unchanged at $156.72. March crude oil declined $1.33 ending at $79.68 per barrel. The Dow gained 29 points ending at 33,978 while the Nasdaq gained 109 points closing at 11,622.
