Class III milk futures showed strong gains rebounding from the lows last week. The strength was due to the increase in cheese prices during spot trading. The strength was not likely the result of lower milk production and lower cheese inventory in December as these have already been factored into the market. It was buyers trying to purchase cheese at the lower prices with sellers not being aggressive today. Milk production was expected to be below a year ago, which was not a surprise. Production in the country was 0.5% below a year ago with cow numbers declining by 9,000 head from November but 3,000 head more than a year ago at 9.351 million head. Milk production per cow was 10 pounds lower than December 2023 which kept production from increasing. Fourth quarter milk production was down only 0.1% from a year ago. There were 11 states with milk production declines. The state with the largest percentage decline in milk production was Oregon with a decline of 8.2%. California showed a decline of 6.8% with Arizona down 5.1%. The rest of the states were down 3.3% or less. The largest production increase was in Texas with a gain of 7.5% followed by South Dakota with a gain of 6.4%. All the other gains were less than 4.0%.
AVERAGE CLASS III PRICES:| 3 Month: | $19.91 |
| 6 Month: | $19.57 |
| 9 Month: | $19.37 |
| 12 Month: | $19.25 |
The increase in cheese prices was not likely a change in trend but just the normal movement of the market. Sufficient cheese is available to the market which is expected to keep prices in a range. The buyers and sellers will do business when the price is right, creating volatility. Cheese inventory is below a year ago but that was expected as it has been running below a year ago for much of the year.
BUTTER:The butter price is expected to remain in a range and at lower levels. December inventory was 11% higher than December 2023. This was a surprise as inventory in November was even with a year ago. Butter stocks increased by 8.7 million pounds, but the increase pushed stocks higher by comparison. Heavy cream supplies might increase inventory more rapidly than a year ago.
OUTSIDE MARKETS SUMMARY:March corn closed down 4.50 cents per bushel at $4.8200, March soybeans closed down 10.75 cents at $10.4500 and March soybean meal closed down $4.10 per ton at $300.80. March Chicago wheat closed down 8.50 cents at $5.3550. April live cattle closed up $0.80 at $203.83. March crude oil is down $1.56 per barrel at $73.10. The Dow Jones Industrial Average is up 289 points at 44,714 with the NASDAQ down 612 points at 19,342.
