GENERAL OVERVIEW:
The recent strength in the markets was an aberration void of underlying fundamental support. There is the potential for prices to fall back to the level they had been a week ago. Both Class III and Class IV milk futures were hit hard.
MILK:
Milk futures took a beating again today with mostly double-digit losses. The recent price increases did not make sense fundamentally, and it is clearly seen that it was an aberration. It was a market that moved by fear and then fed on itself until that even ran its course. A large void was created under the market, and there is little interest in supporting the price. Some buying in the spot cheese and butter markets is taking place on the way down without anyone being aggressive. There are reports of herd expansions continuing to take place, along with strong milk production per cow. The potential for low milk prices continuing has little impact on the desire of farmers to milk cows. A large part of the farm income comes from the sale of calves. The slaughter of dairy cattle did increase significantly in December, totaling 248,400 head. This was 44,300 head more than in November and the highest monthly slaughter since February 2024, and the highest December slaughter since 2022. However, dairy cattle numbers increased by 9,000 head during the month.
AVERAGE CLASS III PRICES:
| 3 Month: | $15.40 |
| 6 Month: | $16.07 |
| 9 Month: | $16.56 |
| 12 Month: | $16.81 |
CHEESE:
Many cheese plants had more milk available to them over the past week as the winter storm reduced spot milk demand from Class I and II processors. The result is spot milk prices ranging from $1.00 to $5.00 below class. Retail cheese demand continues to remain strong, but food service demand remains slower.
BUTTER:
There is little demand for spot cream due to plants having sufficient volumes from regular supplies. Churns are running at full capacity, providing sufficient butter for both retail and food service demand. The large increase in the butter price was a buyer needing to purchase some for immediate needs, and likely other buyers thinking something was happening that they did not know about and wanted to purchase some just in case. That concern has since vanished.
OUTSIDE MARKETS SUMMARY:
March corn closed up 3.50 cents per bushel at $4.3000, March soybeans closed up 7.75 cents at $10.7500, and March soybean meal closed up $3.80 per ton at $297.80. March Chicago wheat closed up 12.75 cents at $5.3600. April live cattle closed up $1.33 at $238.73. March crude oil is up $0.82 per barrel at $63.21. The Dow Jones Industrial Average is up 12 points at 49,016, with the NASDAQ is up 40 points at 23,857.
