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.
