MILK
Class III milk futures just cannot seem to find strength even with limited underlying support. Though buying interest should surface, fundamentals do not support upward price movement. First, any underlying price increases are short-lived. Second, milk production continues to hold stronger than anticipated and cow numbers are not declining as expected.
The December Milk Production report showed production in the top 24 states was down only 0.1%. Milk production per cow totaled 2,030 pounds, 1 pound above December 2022. Dairy cow numbers were 17,000 head less than a year ago but remained unchanged from November. Milk production in the U.S. was down 0.3% from December 2022. Milk production per cow was 2 pounds higher than a year ago at 2,014 pounds. Cow numbers were down 39,000 head from a year ago and down 1,000 head from November.
This was a bearish report as milk production continues to hold well despite being slightly lower than a year ago. The first half of the year showed milk production at 0.7% above a year ago while the second half of the year showed production down 0.6%. This leaves milk production virtually unchanged from 2022. Lower milk prices have not resulted in increased culling and a decrease in milk production. This may keep milk prices low for an extended period. It seems as if it will be up to demand to support milk prices and not a decline in milk production.
AVERAGE CLASS III PRICES
| 3 Month: | $15.54 |
| 6 Month: | $16.29 |
| 9 Month: | $16.87 |
| 12 Month: | $17.18 |
CHEESE
Cheese prices have not been moving much, which has kept Class III milk futures on the defensive. The December Cold Storage report showed that American cheese inventory closed the year 2% above 2022. American cheese inventory increased by 9.4 million pounds, totaling 837.8 million pounds. Swiss cheese inventory increased 125,000 pounds, totaling 21.1 million pounds, down 13% from December 2022.
Other cheese inventory declined 3.6 million pounds from November and 2% below a year ago. This put the total cheese inventory at 1.443 billion pounds, up 5.9 million pounds and virtually unchanged from December 2022.
BUTTER
The surprise in the cold storage report was the inventory of butter. It declined by 13.1 million pounds, totaling 199.5 million pounds. This closed the year 8% below a year ago. The November report showed butter inventory up 8% from a year earlier with the December report down 8%. That is a huge swing and should keep butter price supported at current levels.
OUTSIDE MARKETS SUMMARY
March corn closed up 5.75 cents per bushel at $4.5225, March soybeans closed up .75 cent at $12.4025 and March soybean meal closed up $2.20 per ton at $363.30. March Chicago wheat closed up 14.25 cents at $6.1075. April live cattle closed up $0.53 at $178.35. March crude oil is up $0.72 per barrel at $75.09. The Dow Jones Industrial Average is down 99 points at 37,806 while the NASDAQ is up 56 points at 15,482.
