MILK
Class III milk futures moved quickly higher during spot cheese trading as both blocks and barrels increased substantially. As the afternoon progressed, contracts during the second half of the year fell into negative territory as traders anticipated there may be a limit to upside price potential. Class III futures did not increase as much as the underlying gain of spot prices would suggest due to traders becoming accustomed to wild price swings over the past few months. Class IV futures showed strength even though underlying cash suggested otherwise. Traders continue to take short-term positions to try to take a quick profit out of the market. That is what is creating more volatility. Fundamentals have not changed much with sufficient milk supply to satisfy both bottling and manufacturing needs. USDA will provide the milk production numbers for December along with increases or decreases of cow numbers on the milk production report that will be released on Wednesday.
AVERAGE CLASS III PRICES
| 3 Month: | $18.81 |
| 6 Month: | $18.83 |
| 9 Month: | $19.08 |
| 12 Month: | $19.26 |
CHEESE
The rebound of cheese prices today was impressive and likely unwarranted. Buyers were so intent on trying to take advantage of the drop of prices last week that they got caught up in the excitement of the moment pushing prices higher than they had been at the peak of last week. Buyers and sellers are seeming to be more like speculators trying to outguess each other creating unprecedented price swings. This may not change in the near-term.
BUTTER
Weakness today is indicating there may be further pressure as the week progresses. Increased butter production will keep sufficient supply available to the market. It is anticipated inventory in December increased and may be near the same level as it was at the end of 2021. This may keep upside price potential limited.
Outside Markets Summary
March corn fell 10 cents ending at $6.6625. March soybeans declined 16.25 cents closing at $14.9025 with march soybean meal down $1.80 per ton closing at $461.90. March wheat fell 231.50 cents closing at $7.20. February live cattle gained $0.85 ending at $157.47. March crude oil slipped $0.02 ending at $81.62 per barrel. The Dow gained 254 points ending at 33,630 while the Nasdaq gained 224 points closing at 11,364.
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