GENERAL OVERVIEW:
It was not a good day for milk futures. The weakness of butter and block cheese sent both Class III and Class IV futures lower. Higher spot trading activity with lower prices does not indicate the market is near support.
MILK:
Traders were unable to find positive fundamental news to generate buying interest in the market. Overnight price activity set the tone for the day, with traders already anticipating bearish price action. Their perception was correct as the spot butter and block cheese prices declined. It has not been a great start to the year, with the near-term outlook not any better. Milk production is expected to remain strong as cow numbers are not projected to decline anytime soon. The November Dairy Products report will be released on Tuesday and is expected to show continued strong cheese and butter production.
AVERAGE CLASS III PRICES:
| 3 Month: | $15.07 |
| 6 Month: | $15.66 |
| 9 Month: | $16.25 |
| 12 Month: | $16.57 |
CHEESE:
The inventory of cheese in November was 2.0% above a year earlier. Cheese production in November is expected to exceed that of November 2024, which would add to the bearishness of the market. Manufacturers will continue to move supply to the spot market at reduced prices to keep the supply from building at the plant level. Buyers will hold back as long as they see that sellers want to move supply, even if it takes lower prices to do it.
BUTTER:
It is uncertain how low the butter price will move. The lowest price in 2021 was $1.21, and it may be headed to that level. Plentiful cream supplies and churns running at full capacity will leave sufficient butter available for consumption. Bulk butter inventory is beginning to build due to the holiday baking season being finished.
OUTSIDE MARKETS SUMMARY:
March corn closed up 7.00 cents per bushel at $4.4450, March soybeans closed up 16.25 cents at $10.6200, and March soybean meal closed up $3.90 per ton at $299.90. March Chicago wheat closed up 6.00 cents at $5.1250. February live cattle closed down $0.13 at $235.88. February crude oil is up $1.05 per barrel at $58.37. The Dow Jones Industrial Average is up 595 points at 48,977, with the NASDAQ up 160 points at 23,396.
