MILK
The bullish price outlook that developed after the milk production report last week quickly ran its course as buyers and sellers of the physical product did not share the same sentiment. Milk futures fell back dramatically after traders saw underlying cash prices showing weakness. Milk production is sufficient for demand with the industry not concerned over supply at the current time. A greater concern may develop if cow numbers continue to decline and milk production remains below a year ago. As long as buyers of the physical product remain comfortable with supply, there may be limited upside price potential.
The FSA released the average soybean meal price this morning which is used to determine the income over feed price for the Dairy Margin Coverage program. The average January price was $378.40 per ton. This was a decline of $62.20 per ton from December. This puts the income over feed for January at $8.48. There will be a payment to farms that chose the $8.50 or higher level.
AVERAGE CLASS III PRICES
| 3 Month: | $16.92 |
| 6 Month: | $17.51 |
| 9 Month: | $17.90 |
| 12 Month: | $17.94 |
CHEESE
For the week, blocks were unchanged with 12 loads traded. Barrels gained 3.50 cents with 16 loads traded. Dry whey fell 9.75 cents with seven loads traded. It does not seem that the numbers are correct due to the substantial decline of Class III milk futures. However, cash jumped to close last week, then pushed higher early in the week before falling back again. The inability of prices to hold the gains turned traders bearish.
BUTTER
Butter price took a hit with a decline of 9.25 cents for the week with 31 loads traded. For a time, it seemed as if butter was in a better position to trend higher than cheese and the downside would be limited. However, it just was not the time for a steady uptrend. Price should remain supported with demand expected to improve somewhat over the next month. Grade A nonfat dry milk price slipped 0.25 cent this week with 16 loads traded.
OUTSIDE MARKETS SUMMARY
May corn closed down 4.75 cents per bushel at $4.2475, May soybeans closed up 10.50 cents at $11.5125 and May soybean meal closed up $3.10 per ton at $332.30. May Chicago wheat closed down 18.50 cents at $5.5775. April live cattle closed up $3.10 at $188.45. April crude oil is up $1.52 per barrel at $79.78. The Dow Jones Industrial Average is up 99 points at 39,087 with the NASDAQ up 183 points at 16,275.
