MILK
Class III milk futures remained under pressure this week mostly due to the weakness of the block cheese price. Barrel cheese was higher and dry whey remained unchanged. Traders' focus was on the block price which increased the selling pressure on Class III futures.
The February contract is flat-lining as it is mostly priced by the trade. February Federal Order class prices will be announced Feb. 28. March is just beginning to be priced and will remain susceptible to underlying price movement for the next few weeks.
If milk production remains at the current level and cheese demand remains as it is, the next few months will not see much upside potential. Class IV futures could see further gains due to the butter price being more supported with the potential for further gains in underlying cash as the Easter season approaches. This has been an interesting dynamic over the past year and could become more interesting as the year progresses.
AVERAGE CLASS III PRICES
| 3 Month: | $16.70 |
| 6 Month: | $17.32 |
| 9 Month: | $17.77 |
| 12 Month: | $17.89 |
CHEESE
For the week, blocks fell 9 cents with 16 loads traded. Barrels gained 3 cents with eight loads traded. Dry whey remained unchanged with one load traded.
Traders have lost some expectations for prices to move higher anytime soon. The brief increase a few weeks ago seems to be the result of the demand for the end of football season. Regular demand has not been sufficient to hold the market at higher levels. Milk production may decrease as the year progresses but may take some time before the cheese supply tightens. Much of the year is ahead and much can change due to many other factors that may affect milk production or demand.
BUTTER
For the week, butter increased by 6 cents with 17 loads traded. Grade A nonfat dry milk price decreased by 3 cents with 16 loads traded. The market is certainly in a better position than cheese with increased demand ahead as the Easter season draws near. More price premium has been put in butter futures as traders seem more optimistic over the price potential for the year.
OUTSIDE MARKETS SUMMARY
March corn closed down 1.25 cents per bushel at $4.1650, March soybeans closed up 10 cents at $11.7225 and March soybean meal closed up $6.10 per ton at $345.60. March Chicago wheat closed down 6.50 cents at $5.6050. April live cattle closed up $1.95 at $187.55. April crude oil is up $0.87 per barrel at $78.46. The Dow Jones Industrial Average is down 145 points at 38,638 with the NASDAQ down 131 points at 15,776.
