MILK
The volatility of milk futures was not very great today, but trading volume was higher than usual. The volume in January was nearly 900 contracts with February over 750 contracts. There certainly was no limited trading due to the holiday season. The markets are not like they once were before electronic trading as orders can be placed from anywhere at any time. The proverbial slower trading is not as issue as it once was.
We have not seen any significant change in fundamentals in the dairy industry over the past few weeks. Grain prices show limited volatility with corn and soybean meal in a downtrend. Less expensive feed prices will keep milk production strong as farmers balance rations for optimal milk production.
AVERAGE CLASS III PRICES
| 3 Month: | $15.71 |
| 6 Month: | $16.41 |
| 9 Month: | $17.04 |
| 12 Month: | $17.39 |
CHEESE
The volume of unfilled bids for barrels remaining at the close of trading for the past few days has been interesting. It has not resulted in buyers being very aggressive but seems to indicate price may be at a level at which buyers are interested in purchasing rather than holding back. This does not necessarily indicate a bottom has been established and that prices will trend higher, but it may indicate the downside is limited. The inability of blocks to hold the initial higher price during spot trading does not provide much support.
BUTTER
With inventory in November being 8% above a year ago, it indicates the year will close with a significantly higher supply. The current production of butter has increased due to more cream being available which may leave buyers comfortable with supply and willing to continue to purchase on an as-needed basis.
OUTSIDE MARKETS SUMMARY
March corn closed up 7.25 cents per bushel at $4.8025, March soybeans closed up 12.75 cents at $13.1900 and March soybean meal closed up $4.80 per ton at $395.90. March Chicago wheat closed up 20 cents at $6.3625. February live cattle closed up $1.88 at $170.40. February crude oil is up $1.64 per barrel at $75.20. The Dow Jones Industrial Average is up 159 points at 37,545 with the NASDAQ is up 82 points at 15,075.
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