GENERAL OVERVIEW:
Milk futures were mixed, with contracts mostly lower in Class III and mixed in Class IV. Class IV futures did not react much to the weakness of butter and nonfat dry milk. Dairy cattle slaughter in January was lower than in December and lower than the previous year. USDA will release the January Cold Storage report on Tuesday.
MILK:
Milk futures held their ground for the most part today, regardless of what spot prices did. The weakness of dry whey offset the gain in the block cheese price. However, the weakness of butter and nonfat dry milk should have put more pressure on Class IV futures, but traders took it in stride, believing that it may be a temporary setback. On the other hand, milk production continues to outpace last year, and the increasing cow numbers will support that growth. With the potential for higher milk prices as the year progresses due to the recent increase in the spot prices, farmers will continue to increase cow numbers. January dairy cattle slaughter totaled 246,800 head. This was 1,000 head less than January 2025 and 1,600 less than December. This was the lowest January slaughter since 2008. USDA will release the January Cold Storage report on Tuesday, providing insight into the level of demand for the month.
AVERAGE CLASS III PRICES:
| 3 Month: | $16.27 |
| 6 Month: | $17.04 |
| 9 Month: | $17.38 |
| 12 Month: | $17.42 |
CHEESE:
The block cheese price remained resilient today, bouncing back from an initial loss to close higher. Buyers did not step back to see if they could purchase supplies at lower prices, but remained aggressive in their desire to purchase in case higher prices would unfold sometime during the year. Currently, it looks like the milk supply will be sufficient to maintain strong cheese production.
BUTTER:
Butter may have established a temporary top as buyers may have purchased their desired supplies. This may leave a void in the market with little desire for buyers to be aggressive, as the sellers seem very willing to purchase butter but only at lower prices. It will be interesting to see whether butter inventory increased or decreased during the month compared to the previous year.
OUTSIDE MARKETS SUMMARY:
March corn closed steady at $4.2750, May soybeans closed down 3.50 cents at $11.4975 and May soybean meal closed down $1.30 per ton at $312.50. May Chicago wheat closed down 6.50 cents at $5.7375. April live cattle closed down $2.75 at $239.25. April crude oil is down $0.20 per barrel at $66.28. The Dow Jones Industrial Average is down 822 points at 48,804, with the NASDAQ down 259 points at 22,627.
