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.
