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.
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