MILK
One does not need to wonder why milk prices are at the current level. There is much discussion as to the fact that many think prices are too low and need to rebound soon. However, it is reported that spot milk in the Central Region is still being offered for sale at $10.00 under class. Last year, spot milk was at most $1.50 under class. This is the first time milk has been discounted this much for this duration of time. It is not the fact that milk supply is overly abundant, but is sufficient for demand. Manufacturers and bottlers have sufficient supply for needs and are not aggressively purchasing extra from the spot market. The increase in cheese prices today had little impact on Class III milk futures. Contracts through June were higher with later contacts lower. April showed the greatest strength and that was only 8 cents higher. With the gain in cheese prices, it should have pushed Class III futures 40-50 cents higher. But traders have been conditioned to limited gains and limited losses in underlying cash. this leaves them scalping the market rather than taking long-term positions.
AVERAGE CLASS III PRICES
| 3 Month: | $17.70 |
| 6 Month: | $18.28 |
| 9 Month: | $18.73 |
| 12 Month: | $18.82 |
CHEESE
It is interesting to see that some Class III futures contracts made new lows this week while cheese price moved higher. For the week, block gained 7 cents with 9 loads traded. Barrels gained 3.50 cents with 25 loads traded with 20 of those loads trading today. Dry whey declined 2 cents with 9 loads traded. American cheese production in January totaled 501 million pounds and 6.2% above January 2022. Italian type cheese production totaled 501 million pounds and was 0.4% below a year ago. Total cheese output reached 1.21 billion pounds, up 3.2% above January 2022. This indicates good demand during the month as inventories decreased even though cheese production increased. Dry whey production totaled 77.9 million pounds, down 3.1% from a year ago.
BUTTER
Butter production in January totaled 201 million pounds. This was 3.8% above January 2022. Nonfat dry milk production totaled 177 million pounds and 4.0% above a year ago. Skim milk powder output totaled 42.8 million pounds, down 1.5% from a year ago. Regular hard ice cream production reached 53.5 million pounds, up 4.4% from January 2022. For the week, butter declined 8.50 cents with six loads traded. Grade A nonfat dry milk price declined 3.75 cents with eight loads traded.
OUTSIDE MARKETS SUMMARY
March corn gained 7.50 cents closing at $6.4525. March soybeans gained 10.75 cents closing at $15.3050 with March soybean meal up $8.80 per ton closing at $498.10. March wheat declined 5.50 cents ending at $6.9575. April live cattle gained $1.32 closing at $165.42. April crude oil gained $1.52 ending at $79.68 per barrel. The Dow gained 387 points closing at 33,391 while the Nasdaq gained 226 points closing at 11,689.
