MILK
Milk futures did not receive much influence from the November Milk Production report. Class III futures closed mixed with little direction from underlying cash. Class IV futures were steady to slightly higher, seeing limited strength even though butter showed a strong price increase. Traders did not want to jump on the bandwagon just because there was a significant decrease in cow numbers from October with milk production 0.6% below the previous year. This was for November and already absorbed into the market with no real tightness developing and no concern over milk supply.
Milk prices are not expected to move very much through the end of the year and likely not for a period into the new year. Demand seasonally slows early in the year other than the demand for the playoffs and the Super Bowl.
The milk production report showed 10 states of the top 24 states with production declines from November 2022. New Mexico showed the largest decline of 10.1%, followed by Vermont with a decline of 3.4%. Oregon declined 2.4%; Texas was down 2.2%; Colorado was down 2.1%; California declined 1.7 %; Kansas declined 1.5%; Pennsylvania was down 1.4%; Washington was down 0.8%; and Minnesota declined 0.7%. The state with the largest increase was South Dakota with a gain of 7%, followed by Florida with a gain of 6.2%. Ohio gained 2.5% with the rest of the top 24 states showing gains of 2% or less.
AVERAGE CLASS III PRICES
| 3 Month: | $15.84 |
| 6 Month: | $16.54 |
| 9 Month: | $17.14 |
| 12 Month: | $17.51 |
CHEESE
At least the weakness of cheese subsided today with only a slight price increase. There were numerous willing buyers for barrels but not at the current price as bids were posted below the market. It will be interesting to see if those buyers will become a bit more aggressive during spot trading on Wednesday. Upside price potential is probably limited for the time being.
BUTTER
Price made a surprising increase over the past three days, gaining 14.50 cents. This has not had a large impact on Class IV futures but provided some support. The substantial price difference between Class IV and Class III futures remains and may continue for the foreseeable future. Traders are not very optimistic as butter futures hold a discount to cash.
OUTSIDE MARKETS SUMMARY
March corn closed down 4.25 cents per bushel at $4.7275, January soybeans closed down 14.50 cents at $13.1250 and January soybean meal closed down $9.60 per ton at $403.20. March Chicago wheat closed up 5.75 cents at $6.2275. February live cattle closed down $0.85 at $168.78. February crude oil is up $1.34 per barrel at $74.16. The Dow Jones Industrial Average is up 252 points at 37,558 with the NASDAQ up 98 points at 15,003.
