MILK
Class III futures were under pressure due to the fall of block cheese overshadowing the gain of barrels. Each time underlying cash bounces up, it moves to a lower low after the brief gain. Even though cow numbers declined from November, there is still sufficient milk available for demand. Even with cow numbers decreasing, the nation's dairy herd in December was higher than it was a year earlier. This may change with continued high feed prices and lower milk prices. USDA will release the December Agricultural Prices report tomorrow containing the prices used for calculating income over feed. I do not expect a Dairy Margin coverage payment with income over feed likely above the $9.50 limit. This is the final call for anyone who wants to sign up for the Dairy Margin Coverage program for this year as the deadline is tomorrow. You would need to contact your FSA office to sign up. USDA will also release the Bi-annual Cattle Inventory report tomorrow. The average analyst estimates the dairy herd to be slightly lower than a year ago, but I think there is a strong possibility it will be slightly higher based on the recent milk production report.
AVERAGE CLASS III PRICES
| 3 Month: | $18.40 |
| 6 Month: | $18.44 |
| 9 Month: | $18.80 |
| 12 Month: | $19.02 |
CHEESE
Price swings continue in this market but the swings to the upside show less strength. This results in lower highs. It is possible price may break below the previous lows of a little over a week ago. Cheese production continues to run strong meeting demand as well as building inventory. Demand is variable depending on the variety and the area. Barrels are in a more plentiful supply situation than blocks as indicated by the wide block/barrel spread.
BUTTER
Buyers wanted to take advantage of a lower price to possibly increase ownership for upcoming Spring demand. They are not aggressive with purchases to build inventory or even with forward contracting unlike they were a year ago. Much of last year was supported by the fear of tightening supply. That is not the case currently.
Outside Markets Summary
March corn gained 0.75 cents closing at $6.8375. March soybeans jumped 25.75 cents closing at $15.3525 with March soybean meal up $15.20 per ton closing at $488.70. March wheat gained 2.50 cents closing at $7.5250. February live cattle gained $2.02 ending at $158.75. March crude oil declined $1.78 per barrel closing at $77.90. The Dow declined 261 points closing at 33,717 while the Nasdaq fell 228 points closing at 11,394.
