MILK
Class III futures stopped their recent rally today as cheese prices retraced. Of course, futures were under greater pressure than should have been relative to underlying cash. The pattern has been that futures price increases have lacked strong gains on price increases of underlying cash but remove gains more rapidly once underlying cash prices weaken. Follow-through selling may continue overnight as some who have not been watching the market today realize what took place and will liquidate some positions. Traders may approach the market with greater apprehension on Friday. The previous adverse weather event resulted in some milk being diverted to other operations which minimized the impact that weather had on manufacturing and delivery. Much of the same will probably happen with this upcoming storm. So far, milk production has continued to slowly improve albeit at levels lower than a year ago. USDA will release the World Agricultural Supply and Demand report on Friday which will set some direction for corn and soybean prices. It is possible the reaction to the report will be short-lived, but it could set a longer-term price direction depending on ending stocks and estimated production out of Brazil and Argentina. There also will be a Quarterly Grain Stocks report that will be released which may impact the balance sheets.
AVERAGE CLASS III PRICES
| 3 Month: | $15.79 |
| 6 Month: | $16.68 |
| 9 Month: | $17.19 |
| 12 Month: | $17.48 |
CHEESE
Cheese demand in some areas of the country is reported to have declined after the holidays with food service demand slipping. Retail demand has been holding well for cheddar varieties, but some specialty cheeses have seen some decline. This is somewhat normal post-holiday season. But it is not what we would like to see now due to lower cheese prices and supplies readily available. The World Agricultural Supply and Demand report on Friday will provide price estimates for milk and dairy product prices.
BUTTER
Churns are active with some looking ahead and preparing for spring demand and contracts that are already on the books. Cream supply is termed as heavy with some plants turning cream away due to their already full production schedule. The inability of spot butter price to maintain the gain during spot trading today may result in buyers holding back during spot trading on Friday.
OUTSIDE MARKETS SUMMARY
March corn closed down 1.75 cents per bushel at $4.5775, March soybeans closed steady at $12.3650 and March soybean meal closed down $2.10 per ton at $362.20. March Chicago wheat closed down 7.00 cents at $6.0375. February live cattle closed up $1.05 at $171.80. February crude oil is up $1.43 per barrel at $72.80. The Dow Jones Industrial Average is up 15 points at 37,711 with the NASDAQ is up 1 point at 14,970.
