MILK
The milk production report was friendly to the market, prompting the short covering of milk futures on the potential of a tightening market over time. However, increasing futures caused more short covering as traders moved to liquidate positions to preserve some profit or limit losses. The movement of underlying cash showed the daily Class III price calculation to be a few cents lower than the calculation on Wednesday. There is anticipation of a stronger market if a few more months of significantly lower milk production and lower cow numbers continue.
It is interesting to compare the decline in cow numbers to the January livestock slaughter report. Dairy cattle slaughter in January totaled 250,200 head, an increase of 25,500 head from December, which is in line with the production report. However, this compares to slaughter in January 2023 of 297,900 head, a decrease of 44,700 head. This is the lowest January slaughter since 2010. Slaughter is lower than a year ago while cow numbers are lower likely due to fewer replacements being available.
AVERAGE CLASS III PRICES
| 3 Month: | $16.99 |
| 6 Month: | $17.65 |
| 9 Month: | $18.06 |
| 12 Month: | $18.14 |
CHEESE
Cheese demand is termed steady to slightly lower with buying interest quiet. Regular business is being done but buyers have not been aggressive. They may remain that way for a time unless buyers need to build aged inventory. Even though the potential for lower milk production may be seen, buyers may hold the line unwilling to purchase products and pay storage costs. Spot milk is available ranging from $0.50 below class to $0.50 above. The market seems rather balanced. It is uncertain whether lower milk production and cow numbers in January will spur increased buying interest.
BUTTER
Price is creeping higher, moving above the previous high from Jan. 30 and back to the highest level since Nov. 8, 2023. Retail demand is reported as seasonally flat. More retail activity will be seen closer to the Easter holiday. For now, many plants are running near capacity due to the available cream supply.
USDA will release the January Cold Storage report tomorrow with the level of growth of stocks indicating demand for the month.
OUTSIDE MARKETS SUMMARY
March corn closed down 5 cents per bushel at $4.0600, March soybeans closed down 13 cents at $11.4775 and May soybean meal closed down $5.30 per ton at $331.40. May Chicago wheat closed up 1.25 cents at $5.7925. April live cattle closed down $1.15 at $186.55. April crude oil is up $0.70 per barrel at $78.61. The Dow Jones Industrial Average is up 457 points at 39,069 with the NASDAQ up 461 points at 16,042.
