GENERAL OVERVIEW:
Milk futures moved significantly higher, with Class III contracts leading the way. Some Class III contracts were limit up for a time, with a pool of unfilled bids increasing. Class IV futures posted double-digit gains, but with less strength than Class III. The Global Dairy Trade auction trade-weighted average increased 3.6%.
MILK:
Class III milk futures were very strong, spending a part of the day with the March, April, and May contracts limit up. A pool of orders developed in those contracts as traders wanted to buy out of the short positions but were unable to when contracts were limit up. Those contracts did come off the limit, allowing trading to take place. The August, September, and October contracts are now above $18.00. Class IV futures posted double-digit gains but lacked the strength of Class III. The March through December contracts are above $18.00. The Global Dairy Trade auction traded-weighted average increased 3.6%. This is the fourth consecutive event with a gain. Anhydrous milkfat increased 3.6% to $6,751 per metric ton or $3.06 per pound. Butter increased 10.7% to $6,347 per metric ton or $2.88 per pound. Cheddar cheese decreased 1.0% to $4,736 per metric ton or $2.15 per pound. Lactose increased 7.8% to $1,519 per metric ton or $0.69 per pound. Skim milk powder increased 3.0% to $2,973 per metric ton or $1.35 per pound. Whole milk powder increased 2.5% to $3,706 per metric ton or $1.68 per pound. Mozzarella cheese increased 5.0% to $3,879 per metric ton or $1.76 per pound.
AVERAGE CLASS III PRICES:
| 3 Month: | $16.28 |
| 6 Month: | $17.02 |
| 9 Month: | $17.38 |
| 12 Month: | $17.40 |
CHEESE:
The block cheese price moved above the previous high established on Feb. and moved to the highest price since Nov. 24, 2025. This is certainly a victory given the current level of milk production and inventory levels. The price is moving somewhat counter-seasonally, but the upside price potential is uncertain. The USDA will release the January milk production report on Friday, which is expected to show continued strong milk output.
BUTTER:
The butter price is supported for the time being, as buyers have been purchasing supplies aggressively to take advantage of the historically low price. It is uncertain whether butter inventory has increased in January, but the strength in price would suggest that it may not have. Buyers and sellers are waiting to see who will be more aggressive.
OUTSIDE MARKETS SUMMARY:
March corn closed up .75 cent per bushel at $4.2700, March soybeans closed down .50 cent at $11.3350, and March soybean meal closed down $1.90 per ton at $303.90. March Chicago wheat closed up 9.25 cents at $5.4700. April live cattle closed down $0.28 at $242.53. March crude oil is up 2.68 per barrel at $65.01. The Dow Jones Industrial Average is up 129 points at 49,663, with the NASDAQ up 175 points at 22,754.
