Friday Closing Dairy Market Update - January Butter and Cheese Production Increased

MILK

One does not need to wonder why milk prices are at the current level. There is much discussion as to the fact that many think prices are too low and need to rebound soon. However, it is reported that spot milk in the Central Region is still being offered for sale at $10.00 under class. Last year, spot milk was at most $1.50 under class. This is the first time milk has been discounted this much for this duration of time. It is not the fact that milk supply is overly abundant, but is sufficient for demand. Manufacturers and bottlers have sufficient supply for needs and are not aggressively purchasing extra from the spot market. The increase in cheese prices today had little impact on Class III milk futures. Contracts through June were higher with later contacts lower. April showed the greatest strength and that was only 8 cents higher. With the gain in cheese prices, it should have pushed Class III futures 40-50 cents higher. But traders have been conditioned to limited gains and limited losses in underlying cash. this leaves them scalping the market rather than taking long-term positions.

AVERAGE CLASS III PRICES

3 Month:	$17.70
6 Month:	$18.28
9 Month:	$18.73
12 Month:	$18.82

CHEESE

It is interesting to see that some Class III futures contracts made new lows this week while cheese price moved higher. For the week, block gained 7 cents with 9 loads traded. Barrels gained 3.50 cents with 25 loads traded with 20 of those loads trading today. Dry whey declined 2 cents with 9 loads traded. American cheese production in January totaled 501 million pounds and 6.2% above January 2022. Italian type cheese production totaled 501 million pounds and was 0.4% below a year ago. Total cheese output reached 1.21 billion pounds, up 3.2% above January 2022. This indicates good demand during the month as inventories decreased even though cheese production increased. Dry whey production totaled 77.9 million pounds, down 3.1% from a year ago.

BUTTER

Butter production in January totaled 201 million pounds. This was 3.8% above January 2022. Nonfat dry milk production totaled 177 million pounds and 4.0% above a year ago. Skim milk powder output totaled 42.8 million pounds, down 1.5% from a year ago. Regular hard ice cream production reached 53.5 million pounds, up 4.4% from January 2022. For the week, butter declined 8.50 cents with six loads traded. Grade A nonfat dry milk price declined 3.75 cents with eight loads traded.

OUTSIDE MARKETS SUMMARY

March corn gained 7.50 cents closing at $6.4525. March soybeans gained 10.75 cents closing at $15.3050 with March soybean meal up $8.80 per ton closing at $498.10. March wheat declined 5.50 cents ending at $6.9575. April live cattle gained $1.32 closing at $165.42. April crude oil gained $1.52 ending at $79.68 per barrel. The Dow gained 387 points closing at 33,391 while the Nasdaq gained 226 points closing at 11,689.

Friday Midday Dairy Market Summary - Cheese Prices Rebound

OUTSIDE MARKETS SUMMARY:

CORN:	10 Higher
SOYBEANS:	13 Higher
SOYBEAN MEAL:	$8.20 Higher
LIVE CATTLE:	$1.20 Higher
DOW JONES:	277 Points Higher
NASDAQ:	187 Points Higher
CRUDE OIL:	$1.31 Higher

MIDDAY MARKET UPDATE:

Block cheese price gained 4 cents, closing at $1.95 with two loads traded. Barrel cheese price gained 4.50 cents, closing at $1.5750 with 20 loads traded. There was an unfilled bid for a load of blocks and 14 unfilled bids for barrels at the close. This would suggest further buying interest on Monday unless buyers are able to find supply out in the country. Dry whey increased a penny to 44.50 with six loads traded. The increase of blocks and barrels should have moved Class III futures significantly higher, but such is not the case as contracts are mixed ranging from 17 cents lower to 11 cents higher. Contracts through June are higher while later contracts are lower. Traders are just not buying into the strength of cash. Butter price remained unchanged at $2.3450 with no loads traded. No buyers or sellers showed up to do any business Friday. Grade A nonfat dry milk price declined 0.25 cent, ending at $1.1775 with one load traded. Class IV futures have not yet traded. USDA will release the January Dairy Products report today, providing information on the production of dairy products for the month.

Monday Morning Dairy Market Update - Controversial Milk Labeling

OPENING CALLS:

Class III Milk Futures:	Mixed
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	3 to 4 Lower
Soybean Futures:	6 to 8 Lower
Soybean Meal Futures:	$1 to $2 Lower
Wheat Futures:	8 to 10 Lower

MILK:

Bipartisan legislation to combat the unfair practice of mislabeling nondairy products using dairy names was reintroduced. As written, the Defending Against Imitations and Replacements of Yogurt, milk, and cheese to Promote Regular Intake of Dairy Everyday Act (DAIRY PRIDE Act) of 2023 would require nondairy products made from nuts, seeds, plants, and algae to no longer be mislabeled with dairy terms such as milk, yogurt, or cheese. This was in response to the FDA proposing that plant-based drinks can use the name "milk" on their labels. The FDA is currently accepting comments through April 24. Trading activity may be limited and choppy until direction is received from spot trading. However, even movement of spot prices lately has not garnered much volatility and Monday may be no exception.

CHEESE:

April and May cheese futures traded slightly lower overnight. Futures do not show much anticipation for higher prices through the year with cheese futures peaking in October at $2.02. With current price at $1.95, it does not leave much potential. Obviously, this can change as the year progresses and fundamentals change, but it currently reflects the bearish attitude of the market.

BUTTER:

Growing inventory and strong churning activity may keep price entrenched in a range for an extended period. Buyers see no need to be concerned over supply and are purchasing ahead on price dips. Price is expected to remain in a range.