Tuesday Midday Dairy Market Summary - Butter and Cheese Hold Steady

OUTSIDE MARKETS SUMMARY:

CORN:	13 Lower
SOYBEANS:	25 Lower
SOYBEAN MEAL:	$9.50 Lower
LIVE CATTLE:	$2.50 Higher
DOW JONES:	113 Points Lower
NASDAQ:	73 Points Higher
CRUDE OIL:	$1.42 Higher

MIDDAY MARKET UPDATE:

Both block and barrel cheese prices remained unchanged at $1.91 and $1.59, respectively. No buyers are sellers showed up to do any business. Dry whey price slipped 0.75 cent, closing at 45.75 with one load traded. Class III futures have shown some surprising volatility with current contracts six cents lower to 20 cents higher. Butter price remained unchanged at $2.34 with one load traded and an uncovered offer a penny higher at the close. Grade A nonfat dry milk price declined 2 cents, ending at $1.18 with two loads traded. This will put further pressure on Class IV futures. Currently only the March contract has traded down 15 cents. Butter futures are 0.25 to 3.77 cents lower. Dry whey futures are 0.15 to 0.85 cent lower. USDA will release the January Agricultural Prices report today, providing average prices used in the calculation of income over feed for the Dairy Margin Coverage program. It is expected that income over feed with be below the $9.50 level at which payment will be rendered if that was the level chosen at sign-up.

Tuesday Morning Dairy Market Update - Choppy Trading Expected

OPENING CALLS:

Class III Milk Futures:	Steady to 4 Higher
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 2 Lower
Soybean Futures:	7 to 10 Lower
Soybean Meal Futures:	$3 to $4 Lower
Wheat Futures:	Mixed

MILK:

Milk futures are expected to remain choppy as traders continue to scalp the market, taking small profits if they develop. Many traders are not taking long-term positions as there is no definite trend developing. Later months are moving near the low end of the range of support while April through June Class III contracts made new lows again Monday. Underlying cash prices are expected to remain choppy, which will continue to erode milk futures as premium is taken out of the market. Milk futures will bounce, but those increases are becoming more difficult to uncover and maintain. The January Agricultural Price report will be released today, providing most of the prices used in calculating income over feed for the Dairy Margin Coverage program. The soybean meal price is not on that report and is calculated and released by the FSA generally the following morning. A payment is expected as income over feed should be below $9.50.

CHEESE:

Buyers were looking for cheese again Monday and had difficulty finding what they needed even at higher prices. This does not mean supply is tight, but sellers were not anxious to sell as long as prices were increasing. We have been seeing both buyers and sellers hold back, depending on strength or weakness as they wait for the right price to buy or sell. Sufficient cheese is available for needs.

BUTTER:

Growing butter inventory will limit upside price potential. Churning is active, allowing for sufficient supply to satisfy current demand and to build inventory. The growth of inventory is not bearish as the industry wants to have a larger supply available for the second half of the year. This is the time for building inventory to prepare for higher demand. Some buyers are already focusing on procuring third quarter needs.

Monday Closing Dairy Market Update - FDA Says O.K. to Labeling Alternative Drinks as Milk

MILK

Class III futures have been rather choppy today with traders scalping the market attempting to take a quick profit. The strength of cheese and butter should have provided better support to futures than they had. However, the pattern of the market has been that price increases are short-lived and price declines are short-lived. This leaves traders trying to trade in and out of the market during a short period of time. The January Cold Storage report did not provide the support for Class III futures that some had anticipated. Like I mentioned this morning, January milk production and inventory have already been absorbed into the market and prices have not moved very much. A new proposal by the U.S. FDA is suggesting that plant-based milk alternatives be allowed to use the term "milk" to describe their products even if they do not have any dairy content. They are welcoming feedback from the public before it finalizes its guidelines on the topic. This is a very controversial topic and allowing something to be called what it is not, is a bad practice. USDA will release the January Agricultural Price report tomorrow providing the average prices used to calculate income over feed. There should be a Dairy Margin Coverage payment for the month with income over feed below $9.50.

AVERAGE CLASS III PRICES

3 Month:	$17.79
6 Month:	$18.21
9 Month:	$18.73
12 Month:	$18.94

CHEESE

Cheese prices exhibited strength today, but they failed to generate buying interest in Class III futures. Cheese production is holding strong with sufficient milk available to manufacturing. In fact, there is more than enough resulting in spot milk prices as of last week in the Midwest still showing as much as $10.00 below class. It will be quite some time before we will see the level of milk production for the month of February, but current indications are that production held well and remained above a year ago.

BUTTER

It is a little surprising that butter price is holding as well as it had. Inventory is running 20% above a year ago and churning remains active. One year ago, price was $2.63 with price moving higher on concern over supplies later in the year. We do not have that concern now.

OUTSIDE MARKETS SUMMARY

March corn declined 7.25 cents closing at $6.4275. March soybeans declined 10.75 cents closing at $15.1825 with March soybean meal up $1.60 per ton closing at $498.70. March wheat declined 12.25 cents closing at $6.96. February live cattle declined $0.20 closing at $165.00. March crude oil declined $0.64 closing at $75.68 per barrel. The Dow gained 72 points closing at 32,889 while the Nasdaq gained 72 points closing at 11,467.

Monday Midday Dairy Market Summary - Cheese and Butter Increase

OUTSIDE MARKETS SUMMARY:

CORN:	6 Lower
SOYBEANS:	11 Lower
SOYBEAN MEAL:	$1.20 Higher
LIVE CATTLE:	$0.22 Lower
DOW JONES:	127 Points Higher
NASDAQ:	95 Points Higher
CRUDE OIL:	$1.30 Lower

MIDDAY MARKET UPDATE:

Block cheese price increased 3 cents, ending at $1.91 with two loads traded. Barrel cheese price gained 5 cents, closing at $1.59 with no loads traded. There was one buyer who wanted to get a load of barrels but no sellers showed up to do any business. Dry whey price was unchanged at 46.50 cents with no loads traded. Class III futures are mixed, ranging from 14 cents lower to 19 cents higher. March is showing the greatest gain with July showing the greatest loss. Butter price increased 2 cents, closing at $2.45 with one load traded. Grade A nonfat dry milk price declined 1.50 cents, closing at $1.20 with one load traded. Class IV futures have not yet traded. The gain of butter will be offset by the decline of nonfat dry milk. Butter futures are 0.55 to 2.25 cents lower. Dry whey futures are 0.17 to 0.22 cent lower.

Dairy herd numbers expected to decrease in 2023

  The U.S. Department of Agriculture’s latest supply and utilization data shows dairy’s commercial disappearance in 2022 was strong, up 1.6%, according to StoneX broker Dave Kurzawski in the Feb. 20 “Dairy Radio Now” broadcast.

    Total cheese usage was up 2.1%, according to Kurzawski, buoyed by exports, which were up 12% from 2021. American cheese exports were up 38%.

    The story on butter was not as good. Disappearance was down 4.6% for the year. Exports, however, were up 47.6%, indicating domestic demand was lagging, Kurzawski said, down 7%, prompting the question, “Why is butter at $2.40 per pound?”

    The simple answer, according to Kurzawski, is that “the demand for fat is not down. Demand for butter at retail is down and demand for butter at restaurants is down, but demand for fat is probably as strong as it’s been for quite some time.”

    Total nonfat dry milk utilization turned positive in December 2022 following six consecutive months below 2021 levels. Domestic usage rose above a year ago in August, and powder exports saw their biggest volume since December 2019.

    Cheddar block cheese at the Chicago Mercantile Exchange climbed to $1.89 per pound Tuesday but closed Friday at $1.88, up 1.75 cents on the week but 10.75 cents below a year ago.

    The barrels ended the week at $1.5475, 2.75 cents lower, 38.75 cents below a year ago and 33.25 cents below the blocks. Sales totaled six cars of block and 45 of barrel for the week, highest barrel total since the week of May 17, 2021.

    Midwest barrel processors tell Dairy Market News that larger contractual based customers have cut back purchases, which affected production schedules this week and moved milk into other varieties when possible. Some retail cheddar-Italian style cheesemakers said sales were “hearty.” Milk remains notably available, and spot loads at $10 under Class III were reported for the eighth consecutive week but prices varied throughout the region. Some cheesemakers were not seeing offers that low but found milk closer to $4 and $5 under Class. Eyes are still on the large price gap between blocks and barrels. While marketers expect an eventual convergence of the two, there is a bit of instability; however, market tones are not necessarily bearish but viewed more as mixed, DMN said.

    Western cheese demand continues mixed domestically. Both steady and softer sales into retail and food service markets were noted. Contract sales were steady with some reports of inventories being sold out through first quarter and almost sold out for most of second quarter. Export sales saw an uptick. Some cheesemakers are shifting from blocks to barrels. Ample regional milk volumes are available, and cheese production is steady to strong, DMN said. The abundance of barrel cheese is said to be contributing to the large block-barrel price spread at the CME.

    CME butter climbed to $2.4575 per pound Tuesday, highest since Dec. 22, 2022, but closed Friday at $2.3750, down 3.75 cents on the week and 31.50 cents below a year ago, on 10 sales for the week.

    Midwest butter sales are reportedly “meeting expectations,” DMN said; however, “expectations in mid-February represent a somewhat low bar when compared to the spring and late summer/early fall months.” Butter contacts say sales could be worse. Cream continues to flow to butter plants and at favorable pricing for churning. Butter market tones are firmer, according to DMN.

    Cream volumes are also readily available in the West, and cream demand is steady to light. Less than fully staffed production schedules has been a challenge to some operations, but strong butter production continues. “Stakeholders look to assure mid-year demand coverage, but demand is light ahead of the expected increase related to the spring holidays,” DMN said. Retail demand is light, and some report sales are below seasonal forecasts. Spot market demand is mixed as some contacts note light demand, while others note no spot market activity taking place. Second quarter contract sales had a slight uptick from the previous week, but export sales are light, reports DMN, due to “uncompetitive prices compared to the world stage.”

    Grade A nonfat dry milk dropped 3.75 cents Tuesday, following the GDT Pulse, and fell to a Friday finish at $1.22 per pound, 4.50 cents lower on the week and 63 cents per pound below a year ago, with nine sales reported for the week.

    Dry whey gained a penny Monday and closed Friday at 45 cents per pound, up 2.50 cents but 36 cents below a year ago, with only one sale recorded on the week.

    USDA’s monthly Livestock, Dairy and Poultry Outlook, issued Feb. 14, mirrored milk price and production projections in the Feb. 8 World Agricultural Supply and Demand Estimates report.

    The Outlook also warned, “Based on the latest information of lower inventory of heifers for replacement, active dairy cow culling, relatively high forecast for feed costs and weaker expected milk prices, the average number of milk cows is projected lower in 2023 at 9,380 million head, down 25,000 from last month’s estimate. Average milk yield was lowered 25 pounds to 24,345 pounds per cow.”

    While dairy cow culling shot higher in December, it was slightly below December 2021; however, 2023 is looking like increased retirement from the dairy business is in the works, as culling helps stressed cash flows on the farm. Cull prices remain at decent levels.

    The week ending Feb. 4 saw 65,700 dairy cows go to slaughter, down 2,800 from the previous week, but 2,800, or 4.5%, above a year ago. The year-to-date count is at 338,600 head, up 24,100, or 7.7%, from the same period in 2022.

    Dairy farms are also calling it quits. The Daily Dairy Report’s Sarina Sharp wrote in the Feb. 10 Milk Producers Council newsletter, “Livestock auctions have a growing line-up of dairy herds on the docket. … The combination of high slaughter volumes and low heifer supplies could speed contraction in the milk cow herd, but the shift from today’s surplus to tighter milk supplies will take some time. And if markets bounce back prematurely, the painful process will drag on even longer.”

    Tuesday’s Global Dairy Trade Pulse saw the largest number of winning bidders since the Pulse began Aug. 9, 2022, but was the shortest session since then. There was 2.2 million pounds of Fonterra whole milk powder sold, up 30 million pounds from Jan. 31, but at $3,285 per metric ton, down $10 from the Feb. 7 GDT.

    HighGround Dairy warned, “This was a bearish outcome. There were plenty of buyers willing to procure small amounts of whole milk powder at a perceived value, but there was no effort to drive prices higher either or for bidders to push others out with larger quantity bids. Bull markets need fuel to keep momentum going, and this was a lackluster result.”

    HGD also reported, “Widespread power cuts following Cyclone Gabrielle are impacting dairy farmers in some of the hardest hit areas of New Zealand’s North Island, according to the Ministry for Primary Industries.

    “New Zealand’s government has declared a national state of emergency for only the third time in its history, and it has pledged an initial NZ $4 million for recovery efforts in rural communities. The hardest hit areas were Northland, Southern Auckland, parts of the Waikato, Bay of Plenty, Gisborne and Hawke’s Bay. Flooding has ruined orchards, vines, crops and livelihoods in the hardest hit regions, and has also drowned pastures and feed crops for winter.”

    Cooperatives Working Together member co-ops accepted 23 offers of export assistance this week that helped them capture sales contracts for 1.4 million pounds of American-type cheese, 50,000 pounds of butter, 4.9 million pounds of whole milk powder and 333,000 pounds of cream cheese. The product is going to customers in Asia, Central America, the Caribbean, Middle East-North Africa and South America through August.

    CWT’s 2023 exports now total 8.3 million pounds of American-type cheeses, 50,000 pounds of butter, 17.8 million pounds of whole milk powder and 1.2 million pounds of cream cheese. The products are going to 15 countries in five regions and are the equivalent of 216.8 million pounds of milk on a milkfat basis.

    In politics, the Green Bay-based American Dairy Coalitio gave a thumbs up to Sen. Kirsten Gillibrand (D-NY) for “the dairy priorities she has announced ahead of the upcoming 2023 farm bill negotiations, especially her plan to reintroduce the Dairy Pricing Opportunity Act.”
    An ADC press release stated that Gillibrand first introduced the legislation in 2021 with Sens. Leahy (D-VT) and Collins (R-ME).

    “The introduction of this bill was a direct result of Sen. Gillibrand’s 2021 Senate Agriculture Subcommittee hearing on modernizing milk pricing and the FMMO system and has paved the way for critical discussions surrounding FMMO reform in not just Class I pricing, but potentially other areas as well,” the ADC said. “Specifically, the Dairy Pricing Opportunity Act requires the Secretary of Agriculture to initiate the process of holding FMMO hearings within six months on the views and proposals of producers and the dairy industry on Class I skim milk price, including the ‘higher of’ formula … and any other views and proposals on the Class I skim milk price, and such other matters as the Secretary of Agriculture considers appropriate.”

    “We are grateful to Sen. Gillibrand for her leadership on this important bipartisan legislation to open the Federal Milk Marketing Order hearing process which will empower dairy farmers to be at the table. There is consensus among major dairy organizations to see the Class I skim milk price formula returned to the ‘higher of’ instead of the ‘averaging’ formula implemented in May 2019,” said American Dairy Coalition CEO Laurie Fischer.

    The wholesomeness of dairy needs to be defended and the latest salvo is a book, No. 5 on a New York Times list of “10 Nutrition Myths Experts Wish Would Die.” “Plant Milk is healthier than dairy milk.”

    “It’s just not true,” said Kathleen Merrigan, professor of sustainable food systems at Arizona State University and a deputy secretary of agriculture under President Barack Obama, in the article. “Indeed, the myth persists despite how plant-based beverages have much lower protein, numerous additives of dubious value and a lack of uniform quality that should give anyone pause.”

    A press release from the National Milk Producers Federation states, “It’s also not shocking that the misinformation continues. Money talks, and the plant-based sector is well-funded with plenty of media allies and a ready-made base of support in a vegan community that insists a diet that’s impossibly difficult to follow and prone to malnourishment should be adopted by everyone.

    “It also comes down to the names of the products themselves. If (whatever substance of the moment) is put in front of the word ‘milk,’ then a false impression of nutritional equivalence, if not superiority, is easy to create. If that weren’t the intention, the plant-based beverage peddlers wouldn’t be doing it.  

    “The good news is nutrition experts are seeing through it, hence endorsement of integrity in dairy labeling from the American Academy of Pediatrics and others. And consumers are seeing through it, which is why we’re seeing data like this, in which after years of gains, the plant-based tide is starting to recede.”

    Back on the farm, Midwest and Eastern milk output is steady, according to DMN’s weekly update. Areas in the Northeast and Midwest experienced extreme cold temperatures and wind chills, though production was largely unaffected while some hauling obstacles and delays were noted because of ice and precipitation accumulation.

    Milk output in certain locales in the West is steady to higher, but certain areas in northern California are reeling from the effects of recent extreme rainfall and milk output is mixed. Mud has persisted, therefore impeding cow comfort. Overall, Class I sales are steady in all regions as school orders are strong.

Monday Morning Dairy Market Update - Cold Storage Report Spurs Positive Trade

OPENING CALLS:

Class III Milk Futures:	5 to 10 Higher
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	Mixed
Soybean Futures:	Mixed
Soybean Meal Futures:	Steady to $1 Lower
Wheat Futures:	3 to 5 Lower

MILK:

The Cold Storage report was considered bullish to Class III prices. This was reflected in overnight trade. This does not mean that a bottom is in and milk prices will move higher, but it does indicate demand has held well and if milk supply shows signs of tightening, prices may increase. The Milk Production report showing increased milk production and higher cow numbers offset the decrease of lower cheese inventory. Butter was not quite so fortunate as inventory grew substantially in January. Producers are doing a very good job with getting increased milk production out of their cows, which is making up for some of the lower milk prices. The outlook for more corn acres and increased ending stocks by the USDA on their meeting last week may keep milk production strong. There is a correlation between corn prices and milk prices in the overall picture. USDA will release the January Agricultural Prices report Tuesday.

CHEESE:

Cheese inventory was bullish from the standpoint that stocks did not increase from the previous month in the American, Swiss and Total cheese categories. However, that may not bring buyers into the spot market aggressively due to that already being factored into the market as the report was for January and we are already a month out. Cheese prices still declined in February despite reduced supply in January. Inventory continues to remain high historically.

BUTTER:

Butter inventory in January was somewhat bearish with supply 20% above January 2022 and a gain of 21% from December. That may not push prices lower, but it may limit upside potential. Manufacturers wanted to improve inventory and with heavy cream supplies, they have been able to do just that. Business may continue to be done without much fanfare in the near term.

Friday Closing Dairy Market Update - Class III Futures Closed Lower

MILK

Class III milk futures closed lower for the week with new lows in the April and May contracts. This was interesting as spot prices showed little change for the week. Class IV futures were generally higher. There was little change in milk production this week other than some impact from the winter storm. However, that was more confined to the movement of milk and dairy products. Much of the disruption is back to normal again. Milk production in January remained strong with increasing cow numbers. Even though cheese inventory did not grow as usual and expected, it may not have much impact on the current market direction. Milk production is being pushed to be efficient and to make up for lower milk checks with higher volume. It may take more time for culling to increase enough to change the perception of milk supply later in the year. Overall, the winter has been good for cow comfort with the outlook being somewhat mild moving into March.

AVERAGE CLASS III PRICES

3 Month:	$17.73
6 Month:	$18.19
9 Month:	$18.71
12 Month:	$18.93

CHEESE

The January Cold Storage report was a bit friendly with American cheese, Swiss cheese, and total cheese stocks decreasing from December. Generally, they would show an increase as demand slows and stocks build. American cheese inventory decreased 6.5 million pounds from December totaling 818.8 million pounds and 2% lower than January 2022. Swiss cheese inventory decreased 876,000 pounds from December totaling 23.3 million pounds, down 6% from a year ago. Other cheese inventory increased 3.3 million pounds totaling 598.9 million pounds, up 3% from January 2022. This put total cheese inventory at 1.441 billion pounds and slightly lower than a year ago. For the week, blocks were steady with six loads traded. Barrels decreased 0.75 cent with 37 loads traded. Dry whey increased 1.50 cents with four loads traded.

BUTTER

Butter inventory was expected to increase and increase it did. Stocks jumped 46.3 million pounds totaling 262.7 million pounds. This is 20% above a year ago. Stocks certainly have done an about-face since August moving from 22% below the previous year to now 20% above. This should keep butter prices in a range with limited upside potential. For the week, butter gained 5.50 cents with only one load traded. Grade A nonfat dry milk decreased 0.50 cent with 10 loads traded.

OUTSIDE MARKETS SUMMARY

March corn fell 10.25 cents closing at $6.50. March soybeans declined 5.25 cents ending at $15.29 with March soybean meal up $4.00 closing at $497.10 per ton. March wheat fell 30 cents closing at $7.0825. February live cattle gained $0.05 cents closing at $165.20. March crude oil gained $0.93 closing at $76.32 per barrel. The Dow lost 337 points closing at 32,817 while the Nasdaq lost 195 points closing at 11,395.

Friday Midday Dairy Market Summary - Butter Finds Aggressive Buying Interest

OUTSIDE MARKETS SUMMARY:

CORN:	9 Lower
SOYBEANS:	6 Lower
SOYBEAN MEAL:	$2.70 Higher
LIVE CATTLE:	$0.05 Lower
DOW JONES:	394 Points Lower
NASDAQ:	226 Points Lower
CRUDE OIL:	$0.84 Higher

MIDDAY MARKET UPDATE:

Block cheese price declined 7 cents, closing at $1.88 with no loads traded. There were five uncovered offers remaining at the close with no buyers showing up during spot trading Friday. Barrel cheese price declined 2.75 cents, closing at $1.54 with seven loads traded. Everyone who came to do business went home satisfied. Dry whey price increased 0.25 cent, closing at 46.50 with no loads traded. Class III futures are 3 to 19 cents lower. Butter price increased 5 cents, closing at $2.43 with no loads traded. A buyer was aggressively looking for a load, but was unable to entice a seller even after raising the price. Grade A nonfat dry milk price remained unchanged at $1.2150 with no load traded. Class IV futures are 1 to 8 cents lower. Butter futures are 0.50 cent lower to 1.00 cent higher. Dry whey futures are 0.50 cent lower to 0.25 cent higher. USDA will release the January Cold Storage report this afternoon.

 

Friday Morning Dairy Market Update - Cold Storage Report Today

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	Mixed
Soybean Futures:	4 to 7 Higher
Soybean Meal Futures:	$2 to $3 Higher
Wheat Futures:	7 to 9 Lower

MILK:

Milk futures have been unable to hold the gains from Tuesday with contracts back down to where they were or slightly lower than a week ago. Milk production continues to remain steady to slightly higher, leaving sufficient milk supply for demand and then some. With spot milk still being offered as much as $10.00 below class in the Midwest, the industry has basically no concern over supply. With strong cull cow prices and lower milk checks, culling may increase over the next few months as farmers may increase culling to reduce feed costs and to increase income. Increased milk production in January and higher cow numbers will linger in traders' minds for a while, keeping upside price potential limited and may keep cash buyers less aggressive due to sufficient milk supply.

CHEESE:

Cheese futures do not have much premium put into contracts through the year. There is some optimism, but the market needs proof that even current prices will be achieved. So far, prices have not been able to trend higher as any price increase has been short-lived. USDA will release the January Cold Storage report Friday. There may not be much growth in American cheese inventory, but the other categories and total cheese are expected to show growth.

BUTTER:

Butter inventory is expected to show a significant increase during the month of January. Churning has been active with plants utilizing plentiful cream supply. The intent was to build inventory to a more comfortable level and that is being accomplished. A large portion of bulk butter is being put into freezers for later demand. Even with inventory growth, downside price potential is limited.

Thursday Closing Dairy Market Summary - Class III Futures Settle Under Pressure

MILK

The weakness of cheese turned Class III futures lower with some contracts on the verge of moving to new lows. There is more questioning taking place as to how long these lower prices will last. After all, it was a year ago when milk prices were rising eventually making record highs even though supplies were sufficient and milk production only slightly below the previous year. The current attitude of the market is bearish and the market will need to prove that prices should move higher before the attitude might change. The March Class I price was announced today at $18.99, down $1.79 from February and $3.89 lower than March 2022. January dairy cattle slaughter was surprisingly high totaling 297,900 head. This was an increase of 31,600 head from December and 37,100 more than January 2022. This is a surprise due to the milk production report showing an increase of 9,000 cows from December. The only explanation would be that there would have been a lot of replacements entering the herd during the month. The slaughter level in January was the highest it had been since January 2020.

AVERAGE CLASS III PRICES

3 Month:	$17.80
6 Month:	$18.29
9 Month:	$18.82
12 Month:	$19.04

CHEESE

Cheese demand is variable. Consumers are active with purchases, but not quite to the level they were a year ago. Larger contract buyers are reportedly finishing up with second quarter bookings and are already turning their attention to the third quarter. Buyers on the immediate market purchase on price dips and step back at higher prices. This keeps the market range bound. USDA will release the January Cold Storage report tomorrow.

BUTTER

Butter supplies are plentiful with inventory growing. Demand is reported as steady to light with no real indication of any real interest developing for spring demand. Retail demand is light and weaker than forecast for this time of year. Buyers have been increasing ownership without having to chase the market. Inventory is expected to show strong growth during the month of January on the cold storage report tomorrow.

OUTSIDE MARKETS SUMMARY

March corn fell 13.75 cents closing at $6.6025. March soybeans declined 5.25 cents closing at $15.3425 with March soybean meal up $0.50 per ton closing at $493.10. March wheat gained 1.75 cents closing at $7.3825. February live cattle gained $0.25 ending at $165.15. March crude oil gained $1.44 closing at $75.39 per barrel. The Dow gained 109 points closing at 33,154 while the Nasdaq gained 83 points closing at 11,590.

Thursday Midday Dairy Market Summary - Class III Futures Show Pressure

OUTSIDE MARKETS SUMMARY:

CORN:	12 Lower
SOYBEANS:	6 Lower
SOYBEAN MEAL:	$1.40 Lower
LIVE CATTLE:	$0.25 Higher
DOW JONES:	164 Points Lower
NASDAQ:	40 Points Lower
CRUDE OIL:	$1.40 Higher

MIDDAY MARKET UPDATE:

Block cheese price declined a penny to $1.95 with no loads traded. Barrel cheese price declined 3.25 cents closing at $1.5675 with eight loads traded. Buyers held back as they see no need to be concerned over a tightening milk supply. Culling certainly is not trending higher as seen on the milk production report yesterday. The January Livestock Slaughter report will be released today which should show lower dairy cattle slaughter for the month. Dry whey price increase 0.25 cent closing at 46.25 with three loads traded. Class III futures are 17 cents lower to a penny higher with February showing the only gain as it is impacted very little by the movement of cash due to the contract ending on Tuesday. Butter price remained steady at $2.38 with no loads traded. Grade A nonfat dry milk price remained steady at $1.2150 with six loads traded. Class IV futures are 2-12 cents lower. Butter futures are 0.15-2.10 cents lower. Dry whey futures are 0.12 cent lower to 0.75 cent higher.

Fluid Milk and Cream - Western U.S. Report 8

In California, farm level milk output stays mixed for this week. Some stakeholders report     production is strong, while other stakeholders report steady production and paddocks that     are not fully dried up from the heavy rains California received to start 2023. Strong to     steady milk volumes are available throughout the state. Milk availability in the Central     Valley has loosened up over this past week. While Class III demand is steady, with an uptick     in increased production schedules by cheesemakers, demand for all other Classes is strong to     steady. Some contacts report the additional rains received in the state have allowed for     more irrigation. However, contacts also note the state is not out of a drought. According to     the California Department of Water Resources, as of February 21, 2023, the state has gotten     18.91 inches of precipitation for the current 2022-23 Water Year, up 3.69 inches from the     historical average. 

In Arizona, farm level milk output is steady. Milk is available throughout the area. Contacts report regionally balanced supplies for bottling and other production facilities. Class III demand had more activity as some cheesemakers increased production schedules. Demand for all other Classes is unchanged. 

Farm level milk output is steady in New Mexico with more favorable weather for cow comfort. Throughout the area milk volumes are available for processing. All Classes have steady demand. 

In the Pacific Northwest, farm level milk output is strong. Contacts report favorable cow comfort weather has contributed to milk production maintaining forecasted levels. Plentiful milk volumes are available throughout the area. Class III demand is strong to steady. Demand for all other Classes is steady. 

In the mountain states of Idaho and Utah farm level milk output is steady. Colorado farm level milk output is steady to lighter as the state had some unfavorable cow comfort weather. Colorado received some near single digit temperatures and the northwestern part of the state has received winter storm warnings. Regional available milk volumes remain ample. Demand is unchanged for all Classes. 

Condensed skim milk demand is steady. Spot market activity remains light, while contract sales are steady. Regional availability of condensed skim milk is reported as widely available to balanced by contacts. Plentiful to balanced cream volumes are regionally available for producers to keep strong production. Cream multiples were unchanged this week.


     Western U.S., F.O.B. Cream
     Price Range - All Classes; $/LB Butterfat:   2.6394 - 2.9300
     Multiples Range - All Classes:               0.8500 - 1.2100
     Price Range - Class II; $/LB Butterfat:      2.0583 - 2.9300
     Multiples Range - Class II:                  1.0900 - 1.2100

Thursday Morning Dairy Market Update - Milk Futures Might See Pressure

OPENING CALLS:

Class III Milk Futures:	2 to 5 Lower
Class IV Milk Futures:	5 to 10 Lower
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	Mixed
Soybean Futures:	1 to 3 Lower
Soybean Meal Futures:	$1 to $2 Lower
Wheat Futures:	Mixed

MILK:

Milk production in January increased more than expected, which means there will be plentiful supplies of milk available for both bottling and manufacturing. Milk production per cow up 18 pounds is rather significant as cows are being pushed to produce to make up for lower milk prices. The idea that culling might be following a similar pattern as a year ago earlier than anticipated was put to rest Wednesday with an increase of 9,000 cows from December. This reverses the loss of cows from November to December and then some. This may leave buyers unaggressive in the cash markets as they see sufficient supplies of dairy products available to the market. Rather than current milk futures being too low -- as many have suggested -- they may be about right for current supply and demand. The January Livestock Slaughter report will be released Thursday.

CHEESE:

Milk production in January with likely the trend continuing through February indicates there will remain sufficient supply for manufacturing. The January Cold Storage report will be released Friday and it is possible American cheese inventory may not show much of a gain compared to a year ago or even a gain at all. Weekly cold storage reports are not indicating inventory is increasing. However, total cheese inventory is expected to increase. Cheese buyers may be less aggressive, seeing the milk production level of January and current strong production.

BUTTER:

Butter inventory may be increasing more than usual according to weekly cold storage holdings. Active churning with plentiful cream supply has provided for demand and inventory growth. There has been desire to increase inventory to a more comfortable level and that may be taking place more rapidly than usual. Price should remain in a tight range.

Wednesday Closing Dairy Market Update - January Milk Production Up 1.3%

MILK

The much-awaited January Milk production report was released today, and it was not friendly. My estimates were way off as well as anyone else's. Instead of a further contraction of production and cow numbers, it was an expansion. Milk production in the top 24 states increased 1.5% from January 2022 totaling 18.5 billion pounds. Milk production per cow increased 18 pounds. The big surprise was the increase in cow numbers of 9,000 head from December. Milk production in the U.S. increased 1.3% totaling 19.3 billion pounds. Production per cow was up 18 pounds with cow numbers up 9,000 head from December. U.S cow numbers totaled 9.405 million head, 38,000 head more than a year ago. Most were watching what cow numbers were going to show as the December report showed a decrease of 8,000 head from November possibly signaling an increased culling trend developing. That certainly was not the case. Rather an increase in cow numbers and production per cow resumed in January setting the stage for a strong trend in milk production that may hold for a period of time. Farmers have adjusted and are increasing output to make up for reduced milk prices. This will be viewed as negative delaying any upside price potential for a time.

AVERAGE CLASS III PRICES

3 Month:	$17.86
6 Month:	$18.37
9 Month:	$18.93
12 Month:	$19.13

CHEESE

Cheese prices may remain in a range longer than was hoped. The milk production report shows milk supply continues to remain sufficient with no immediate indication of a slowing of supply. In fact, spot loads of milk in the Midwest are still being reported as much as $10.00 below class for the ninth consecutive week. Buyers of cheese see no reason to be aggressive with purchases and may continue to wait for price dips to rebuild aging programs and inventory.

BUTTER

Butter production has remained strong as cream supplies have been plentiful. Inventory has been building as demand is being met with extra moving to cold storage. Some butter manufacturers are turning their attention to expected needs later this year as they indicate spring needs have sufficient supply. That leaves the impression that price may have limited upside as there is no concern over supply at least through the first half of the year.

OUTSIDE MARKETS SUMMARY

March corn declined 6.50 cents closing at $6.74. March soybeans declined 9.25 cents closing at $15.3950 with March soybean meal down $5.10 per ton closing at $492.60. March wheat declined 14 cents ending at $7.3650. February live cattle gained $0.15 closing at $164.90. March crude oil fell $2.41 closing at $73.95. The Dow declined 85 points ending at 33,045 while the Nasdaq gained 15 points closing at 11,507.

January Milk Production up 1.5 percent

January Milk Production up 1.5 percent

Milk production in the 24 major States during January totaled 18.5 billion pounds, up 1.5 percent from January 2022. December revised production, at 18.1 billion pounds, was up 0.7 percent from December 2021. The December revision represented a decrease of 32 million pounds or 0.2 percent from last month's preliminary production estimate.

Production per cow in the 24 major States averaged 2,069 pounds for January, 18 pounds above January 2022.

The number of milk cows on farms in the 24 major States was 8.93 million head, 51,000 head more than January 2022, and 9,000 head more than December 2022.

2022 Annual Milk Production up 0.1 percent from 2021

The annual production of milk for the United States during 2022 was 226 billion pounds, 0.1 percent above 2021. Revisions to 2021 production increased the annual total 35 million pounds. Revised 2022 production was down 158 million pounds from last month's publication. Annual total milk production has increased 12.5 percent from 2013.

Production per cow in the United States averaged 24,087 pounds for 2022, 138 pounds above 2021. The average annual rate of milk production per cow has increased 10.4 percent from 2013.

The average number of milk cows on farms in the United States during 2022 was 9.40 million head, down 0.5 percent from 2021. The average number of milk cows was revised down 2,000 head for 2022. The average annual number of milk cows has increased 1.9 percent from 2013.

Wednesday Midday Dairy Market Summary - Milk Futures Unable to Find Strength

OUTSIDE MARKETS SUMMARY:

CORN:	5 Lower
SOYBEANS:	9 Lower
SOYBEAN MEAL:	$5.70 Lower
LIVE CATTLE:	$0.12 Higher
DOW JONES:	90 Points Higher
NASDAQ:	63 Points Higher
CRUDE OIL:	$2.37 Lower

MIDDAY MARKET UPDATE:

Block cheese price held steady at $1.96 with two loads traded. Barrel cheese price increased 1.75 cents, closing at $1.60 with 13 loads traded. There have been quite a few loads of barrels changing hands over the past 1 1/2 weeks. During the first two days of trading this week, there have been 22 loads traded. Unfortunately, there has not been much more price strength. Sellers want to continue to move product with buyers able to obtain it without chasing price higher. Dry whey price gained a penny, closing at 46 cents with one load traded. Class III futures are 17 cents lower to 10 cents higher. Contracts in the first half of the year are under pressure while contracts in the second half of the year are higher. Butter price remained unchanged at $2.38 with no loads traded. Grade A nonfat dry milk declined 0.50 cent, closing at $1.2150 with three loads traded. Class IV futures are 10 cents higher with trades only taking place in the fourth quarter of the year. Butter futures are 0.97 to 3.90 cents higher. Dry whey futures are unchanged to 0.02 cent higher. USDA will release the January Milk Production report Wednesday afternoon. I estimate milk production to be up 0.5% from a year ago with cow numbers down 3,000 head from December.

Wednesday Morning Dairy Market Update - Milk Production Report Today

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	2 to 3 Lower
Soybean Futures:	4 to 7 Lower
Soybean Meal Futures:	Steady to $1 Lower
Wheat Futures:	6 to 8 Lower

MILK:

It was a strong day Tuesday for Class III futures following strong buyer interest in spot cheese trading. Traders are cautious over the jump of cheese prices as the increase may spark increased selling interest as cheese plants want to limit their growth of inventory. Milk production has been steady to slightly higher. This may be impacted to some extent this week as a strong winter storm is moving through large areas of the country. There will be power outages with most of the impact stemming from that and transportation issues. The storm will be of short duration and fairly mild winter weather is forecast for most areas after that is through. USDA will release the January Milk Production report Wednesday. I estimate milk production to be 0.5% above a year ago with cow numbers down 3,000 head from December. The cow numbers will be watched closely to see if an increased culling trend is developing.

CHEESE:

The strength of cheese was somewhat surprising as there is sufficient supply for demand. However, buyers wanted to gain ownership and were willing to bid up to get it. It makes sense for buyers to pick up supply on price dips as they slowly rebuild aging programs and purchase ahead for upcoming demand. Prices will not remain at these levels indefinitely.

BUTTER:

Butter may not be quite as volatile as cheese as buyers and sellers seem comfortable at the current level. Churning is active, allowing for sufficient supply for demand as well as building inventory. USDA will release the January Cold Storage report on Friday which is expected to show a significant increase of butter supplies.

Tuesday Closing Dairy Market Update - Class III Futures Spring to Life

MILK

Class III futures did an about-face today as double-digit losses quickly turned to double-digit gains during and after spot trading. It was certainly good to see some life coming back into milk futures again. That was not the case for Class IV contracts as they closed the day mostly unchanged. The gains of milk futures were guarded as traders continue to remain cautious over the potential for continued strength for a longer-term duration. It will be interesting to see what the January Milk Production report will show. I estimate milk production to be up 0.5 percent from a year earlier as milk production per cow is slowing. I estimate cow numbers to be down 3,000 head from the previous month. Whether the slowing milk production and reduced cow numbers will be enough to increase the buying interest of spot dairy products is difficult to determine. It may not be sufficient to get buyers too excited. However, a greater decline of production or cow numbers might.

AVERAGE CLASS III PRICES

3 Month:	$17.94
6 Month:	$18.42
9 Month:	$18.91
12 Month:	$19.11

CHEESE

Spot cheese prices showed some surprising strength today with more gain seen in blocks compared to barrels. This moved the block/barrel spread to 37.75 cents. Blocks remain in a tighter supply relative to barrels. Barrels seem to have greater demand as there were 45 loads traded last week and 9 loads traded today. Blocks have not seen near that amount of spot trading activity. Current cheese production remains active.

BUTTER

There was not much going on in butter today. Grade A nonfat dry milk showed no price movement. This left virtually no movement of Class IV contracts. It is very rare that most contacts remain unchanged. There is generally sufficient cause to either see more activity and price movement or the settlement procedure adjusting prices according to the surrounding activity. Butter price might be rangebound for a time as buyers and sellers seem comfortable at the current price.

OUTSIDE MARKETS SUMMARY

March corn increased 2.75 cents closing at $6.8050. March soybeans jumped 21.50 cents closing at $15.4875 with March soybean meal up $6.60 per ton closing at $497.70. March wheat declined 15 cents ending at $7.5050. February live cattle gained $1.17 closing at $164.75. March crude oil declined $0.18 ending at $76.16 per barrel. The Dow fell 697 points closing at 33,130 while the Nasdaq lost 295 points closing at 11,492.

Tuesday Midday Dairy Market Update - Cheese Moves Higher

OUTSIDE MARKETS SUMMARY:

CORN:	2.75 Higher
SOYBEANS:	21 Higher
SOYBEAN MEAL:	$5.30 Higher
LIVE CATTLE:	$1.30 Higher
DOW JONES:	597 Points Lower
NASDAQ:	250 Points Lower
CRUDE OIL:	$0.22 Higher

MIDDAY MARKET UPDATE:

Cheese prices finally moved after a long weekend. Blocks climbed 8 cents to close at $1.9600 with four loads traded. Barrels moved 3.50 cents higher to $1.5825 with nine loads traded. Class III futures were a penny to 23 cents higher. Butter price increased a half cent to $2.3800 with one load traded. Nonfat dry milk was unchanged at $1.2200 with one load traded. Class IV futures haven't seen any trading yet today. Dry whey remained at $0.4500 with no loads traded. Butter futures were unchanged. Dry whey futures were 0.025 cent higher.

Friday Closing Dairy Market Update - Mixed Futures

MILK

Milk production has been steady to higher the past week. Fluid demand is strong despite schools in different regions being closed. This will hopefully open up milk supply for Class II and Class III manufacturing. Weather in the Northern states has improved, increasing cow comfort.

AVERAGE CLASS III PRICES

3 Month:	$17.79
6 Month:	$18.79
9 Month:	$18.81
12 Month:	$19.02

CHEESE

Spot cheese prices saw no price movements, but barrels had some active trading. This caused Class III futures to be mixed. Cheese makers are happy with the plentiful milk supply and running busy production schedules. Some customers have cut back on larger contracts for barrels. Market cheese prices have increased in the past week, and though cheese blocks are not tight they are lighter than in recent weeks.

BUTTER

February butter futures were unchanged at the end of the day. March and April futures saw some increase. Nonfat dry milk had some weakness, putting Class IV futures lower. Butter sales are meeting sellers' expectations. Unsalted butter inventory is creeping closer to being in balance with salted butter. Export sales are light, with prices not being very competitive with other countries.

OUTSIDE MARKETS SUMMARY

March corn was up 1.75 cents, settling at $6.7775. March soybeans gained 0.75 cent to close at $15.2725 with March soybean meal down $0.30 per ton closing at $491.10. March wheat increased 0.50 cent to close at $7.6550. February live cattle increased $0.80, closing at $163.58. Crude oil for March declined $2.15 to end at $76.34 per barrel. NASDAQ fell 68 points to 11,787. The DOW increased 129 points to 33,826.

Friday Midday Dairy Market Summary - Butter Slides Further

OUTSIDE MARKETS SUMMARY:

CORN:	1 Higher
SOYBEANS:	Unchanged
SOYBEAN MEAL:	$1.30 Lower
LIVE CATTLE:	$0.70 Higher
DOW JONES:	62 Points Lower
NASDAQ:	171 Points Lower
CRUDE OIL:	$2.73 Lower

MIDDAY MARKET UPDATE:

Both block and barrel prices remained unchanged at $1.88 and $1.5475, respectively. There were no loads traded of blocks with three loads of barrels traded. It may be difficult for Class III milk futures to gain much traction in the current market environment. Dry whey price increased a penny, closing at 45 cents with one load traded. Class III futures are mixed, ranging from 8 cents lower to 3 cents higher. Butter price declined 4.50 cents, closing at $2.3750 with three loads traded. Current fundamentals do not suggest butter will establish a long-term trend higher as of yet. Price will remain choppy. Grade A nonfat dry milk price was unchanged at $1.22 with no loads traded. Class IV futures have not yet traded with wide bid and offers posted. If they do, prices will be lower. Butter futures are 0.65 cent lower to 3.90 cents higher on light trading activity. Dry whey futures are 0.02 cent lower to 0.25 cent higher. Dairy markets will be closed on Monday and will reopen Monday evening at the usual time.

Friday Morning Dairy Market Update - Choppy Trading Activity Expected

OPENING CALLS:

Class III Milk Futures:	5 to 9 Higher
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	Mixed
Soybean Futures:	2 to 4 Higher
Soybean Meal Futures:	$4 to $5 Higher
Wheat Futures:	2 to 4 Lower

MILK:

Class III futures have retraced the gains from last week, moving futures near the bottom end of the market. Any further weakness of underlying cash could send it to new lows. Class IV futures have been under pressure this week. Even buyer interest in underlying cash has not been able to provide sustained support to futures as that buying interest has been short-lived. Weather has had no significant or sustained impact on milk production. Milk is sufficient for bottling and manufacturing, keeping demand satisfied. This leaves no concern over supplies for the foreseeable future, keeping prices choppy. Futures could rebound a bit Friday as traders may want to cover some short positions into the three-day weekend. Dairy markets will be closed on Monday in observance of Presidents Day.

CHEESE:

Cheese is in somewhat of a holding pattern. Buyers and sellers are taking care of business without much fanfare. Barrels have seen quite a bit of trading activity this week with limited price movement. This pattern is expected to continue for a time.

BUTTER:

Price held Thursday with no buyers or sellers showing up during spot trading. Price might weaken Friday as current supply is sufficient for demand. Churning is active and inventory is growing. Sellers may want to move more product.

Thursday Closing Dairy Market Update - Milk Futures Show Little Movement

MILK

Dairy Market News reports milk production in California to be mixed with lower supplies in the Central Valley while other areas of the state show steady to slightly higher levels of production over the past week or so. The impact of the heavy rains early in the year has been alleviated with lots of drying out. Some spot loads are making their way into the state filling demand for plants that are short of supply. Some of these loads are being offered slightly below class. Much of the rest of the country is seeing steady to slightly higher milk production. Even with cow numbers decreasing from November as indicated on the December milk production report, milk supply is sufficient for demand with spot milk holding a surprising discount to class in many areas. Bottling demand remains steady. Milk futures are struggling to maintain support with traders turning back to a more bearish attitude as prices remain choppy.

AVERAGE CLASS III PRICES

3 Month:	$17.82
6 Month:	$18.33
9 Month:	$18.84
12 Month:	$19.04

CHEESE

There was a good amount of activity during spot trading for barrels. Sellers wanted to move production and buyers found it attractive to purchase what was available. This kept the market in a tight range today. Cheese does not seem to have the support to move higher but continues to fluctuate. This took the steam out of the market moving milk futures back down near the lows. Strong cheese production is meeting demand and then some with inventory expected to have increased in January.

BUTTER

Buyers and sellers had no specific opinion in the market today. Neither showed up to do any business with potentially each side waiting for the other to make a move. The weakness of nonfat dry milk put some pressure on Class IV futures. Butter production is strong with supply meeting demand with excess moving to inventory. Buyers are purchasing some for future demand but are not aggressive with those purchases due to availability.

OUTSIDE MARKETS SUMMARY

March corn slipped 0.25 cent closing at $6.76. March soybeans gained 0.75 cent closing at $15.2650 with March soybean meal up $0.30 per ton closing at $491.40. March wheat declined 4.25 cents closing at $7.65. February live cattle gained $0.22 closing at $162.77. March crude oil declined $0.10 ending at $78.49 per barrel. The Dow fell 431 points closing at 33,697 while the Nasdaq lost 215 points closing at 11,856.

Thursday Midday Dairy Market Summary - Barrels Rebound From Initial Loss

OUTSIDE MARKETS SUMMARY:

CORN:	2 Lower
SOYBEANS:	Unchanged
SOYBEAN MEAL:	$2.30 Lower
LIVE CATTLE:	$0.10 Higher
DOW JONES:	161 Points Lower
NASDAQ:	73 Points Lower
CRUDE OIL:	$0.10 Lower

MIDDAY MARKET UPDATE:

Block cheese price remained steady at $1.88 with no loads traded. A seller showed up with no buyer interest. Barrel cheese price increased a penny to $1.5475 with 11 loads traded. Price initially declined 0.75 cents before buyers became more aggressive, bringing price back up to close higher. Dry whey price increased 0.50 cent, closing at 44 cents with no loads traded. The rebound of barrel price and stronger dry whey had little impact on futures. Class III futures are mixed, ranging from 10 cents lower to 2 cents higher. Butter price remained steady at $2.42 with no buyers or sellers showing up to do any business. Each was waiting for the other to make a move before becoming more involved. Grade A nonfat dry milk price declined 0.75 cent, closing at $1.22 with four loads traded. Class IV futures are unchanged to 19 cents lower with trading only in August, December, and January contracts. Butter futures are 0.62 to 1.47 cents lower. Dry whey futures are 0.37 cent lower to 0.97 cent higher.