GENERAL OVERVIEW:
Class III milk futures remained under pressure despite the increase in the block cheese price. Class IV futures maintained some strength until later in the day when futures began weakening. The average soybean meal price for December was released, which resulted in an income over feed price of $9.58.
MILK:
Milk futures did not fare well today despite the increase in the block cheese price and a steady butter price. It seems as if traders are trading contrary to the underlying cash with the intent of creating volatility. Of course, the cash price swings cause futures to move outside the realm of where the price correlation is and move futures further up or down more than they should. This causes prices to correct to where the correlation should be, despite spot price movements during the day. The average soybean meal price for December was released this morning. The price for December was $311.93 per ton, down $18.94 per ton from November. This results in an income over feed price of $9.58. There will be no DMC payment for the month. Tuesday is the last trading day for January futures and options, with the Federal Order prices announced on Wednesday. The low milk prices that will be seen for January will result in a DMC payment.
AVERAGE CLASS III PRICES:
| 3 Month: | $15.34 |
| 6 Month: | $16.08 |
| 9 Month: | $16.62 |
| 12 Month: | $16.89 |
CHEESE:
The bounce in the spot block price is meaningless and just a matter of business being done. The volume of loads traded is positive, indicating good demand interest. However, the selling interest is an indication of sufficient supplies being available for demand. Cheese prices are expected to be choppy at best.
BUTTER:
At least the butter price held today, but unfortunately, it did not increase. Traders took more premiums out of butter futures. The consensus is that the butter price may have limited upside potential, but traders are cautious. Lower inventory in December was a surprise due to abundant cream supplies and heavy butter output. This may support the price at a higher level.
OUTSIDE MARKETS SUMMARY:
March corn closed down 2.50 cents per bushel at $4.2575, March soybeans closed down 4.00 cents at $10.6025, and March soybean meal closed up $.90 per ton at $294.50. March Chicago wheat closed down 10.25 cents at $5.2775. April live cattle closed up $2.73 at $239.53. March crude oil is down $2.90 per barrel at $62.31. The Dow Jones Industrial Average is up 515 points at 49,408, with the NASDAQ is up 130 points at 23,592.
