GENERAL OVERVIEW:
Class III futures closed mixed, with most contracts posting gains, supported by the increase in the dry whey price. Stronger demand for milk is reported in the regions due to more holiday-type milk products being produced and increased demand for baking.
MILK:
Milk futures showed mixed trade on light volume. The minor movement in spot prices left little reason for traders to become excited. Milk production is expected to remain strong with more processing capacity being built. Hiland Dairy in Tyler, Texas, is expanding its facility. According to a report from eDairy News, "the investment poured into the Tyler plant represents a concerted effort to modernize and increase dairy processing infrastructure. This multifaceted expansion targets key areas, including the integration of new, high-speed production lines and optimization of existing milk packaging and handling systems. The completion of this construction project is poised to create one of the region's most technologically advanced processing hubs, ensuring tighter quality control and increased standardization across a wide range of fluid milk products." The report also goes on to say, "Operationally, the enhanced capacity will dramatically increase the plant's milk throughput, allowing Hiland Dairy to process higher volumes of raw product from local dairy farmers. This is a crucial element for regional dairy economics, providing producers with a more stable and high-volume destination for their supply." It seems a little hard to believe that milk production will remain strong if milk prices continue at current low levels for an extended period. But the market will go in cycles.
AVERAGE CLASS III PRICES:
| 3 Month: | $15.55 |
| 6 Month: | $15.91 |
| 9 Month: | $16.32 |
| 12 Month: | $16.61 |
CHEESE:
Cheese production is strong and is expected to increase through the end of the month, as more milk will be diverted to manufacturing when schools close for a few weeks. Spot milk prices are in a wide range, from $2.00 below to $3.50 over class. Spot prices are expected to weaken as more milk is available.
BUTTER:
Increased demand is what keeps the butter price at the current level. Once that demand slows after the holidays, the price is at risk of declining further. Dairy Market News reports that the Northeast region is reporting larger-than-expected butter production with churn operating seven days a week. This will keep butter available for demand.
OUTSIDE MARKETS SUMMARY:
March corn closed down 3.75 cents per bushel at $4.4425, January soybeans closed up 4.00 cents at $10.9125 and January soybean meal closed down $.10 per ton at $301.20. March Chicago wheat closed down 5.00 cents at $5.2950. February live cattle closed up $1.58 at $228.53. January crude oil is up .67 per barrel at $58.92. The Dow Jones Industrial Average is up 497 points at 48,058, with the NASDAQ up 78 points at 23,654.
