GENERAL OVERVIEW:
Class III futures closed mixed as traders digested the volatility of the past week. Later contracts found some strength to close the day, but not from any strength in cash prices. The December Agricultural Prices report will be released on Friday.
MILK:
The price swings in Class III futures were limited today. Market volatility settled down with movement confined to stabilizing where they should be relative to the underlying cash. The December Agricultural Prices report will be released on Friday, providing most of the prices used in calculating the income over feed price. The FSA will release the average soybean meal price on Monday unless the government shutdown impacts the release of that price. There has been much talk regarding holding onto cattle that normally would be culled to get a calf out of them that is worth money. This seems to revolve around the idea that it is the only reason cow numbers continue to increase. I think this may not be the only reason. I think cows are being managed better, resulting in healthier cows that are producing more milk over a longer duration. After all, slaughter increased significantly in December, and yet the number increased. Cow numbers might be increasing due to better cows that are producing more milk, with milk per cow increasing by 41 pounds in December. A large number of cull cows in the nation's herd do not produce that much milk. It seems that the dairy herd is growing due to good cows that are remaining in the herd longer and are able to supplement milk income by producing calves. The industry may be looking at this from the wrong angle.
AVERAGE CLASS III PRICES:
| 3 Month: | $15.33 |
| 6 Month: | $16.03 |
| 9 Month: | $16.55 |
| 12 Month: | $16.80 |
CHEESE:
Some areas have indicated cheese demand is strong, with manufacturers meeting their contracts with limited supplies left over. This does not seem to be widespread, or spot cheese price would have retained the recent gains and would be trending higher. There is sufficient cheese available, which is why sellers continue to bring it to the spot market.
BUTTER:
Butter futures did not follow the spot butter price lower today. They rebounded into the close as prices adjusted from being overdone to the downside. Added to that were the unfilled bids at the close of spot trading, possibly indicating the price may have reached a level where buyers will be more aggressive.
OUTSIDE MARKETS SUMMARY:
March corn closed up .75 cent per bushel at $4.3075, March soybeans closed down 2.75 cents at $10.7225, and March soybean meal closed down $1.80 per ton at $296.00. March Chicago wheat closed up 5.50 cents at $5.4150. April live cattle closed down $1.45 at $237.28. March crude oil is up $2.21 per barrel at $65.42. The Dow Jones Industrial Average is up 56 points at 49,072, with the NASDAQ down 172 points at 23,685.
