MILK:
The cold weather has impacted a large part of the country, but it is not having much impact on milk production. Farmers had prepared for the adverse weather and reports are that milk production in many areas continues to improve seasonally. However, though production is improving, it remains below a year ago. This is likely to be the pattern moving forward during the first quarter of the year. The February Class III contract was able to regain some of the loss, moving back to the $20.00 level. That is still $1.20 per cwt below the high of 1 1/2 weeks ago. The February contracts are beginning to be priced and should see less volatility next week. The January contracts are mostly priced with the Class III price around $20.28 and the Class IV price around $20.98.
AVERAGE CLASS III PRICES:
| 3 Month: | $20.00 |
| 6 Month: | $19.66 |
| 9 Month: | $19.47 |
| 12 Month: | $19.33 |
CHEESE:
Traders do not know what to make of the spot market. Volatility in the futures market is one thing, but the volatility seen in the block cheese price over the past four days is unprecedented. This increased the caution of traders and may reduce some participation until spot prices settle down somewhat. Cheese production has been steady to slightly higher as milk production slowly improves. Demand for barrel cheese is a bit less than expected at this time.
BUTTER:
The spot butter price has not experienced the volatility of block cheese as the supply and demand seems balanced. Buyers do not see the need to be aggressive and manufacturers will continue to move supply to keep inventory from building more than desired. Churning remains active due to abundant cream supplies.
OUTSIDE MARKETS SUMMARY:
March corn closed up 4.25 cents per bushel at $4.7875, March soybeans closed down 4.75 cents at $10.4275 and March soybean meal closed down $3.80 per ton at $302.00. March Chicago wheat closed up 0.75 cent at $5.4700. February live cattle closed up $1.13 at $198.53. February crude oil is up $2.81 per barrel at $80.31. The Dow Jones Industrial Average is up 703 points at 43,222 with the NASDAQ up 467 points at 19,511.
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