Monday Closing Dairy Market Update - Milk Futures Closed Mixed

GENERAL OVERVIEW:

Class III futures were mixed despite the decline in block, barrel, and cheese prices. Class IV futures were mixed despite the huge increase in the butter price, with some of the strength offset by the decline in nonfat dry milk. Income over feed for January was $7.81, the lowest since August 2023.

MILK:

Class III milk futures were mixed despite the decline of the cheese and dry whey prices. Futures are adjusting to the underlying cash prices, with prices moving relative to what traders anticipate prices to be based on current fundamentals. The surprise strength in the butter price is a mystery with no specific change in the market today or over the weekend. Buyers are excited to increase ownership and have become very aggressive. The number of unfilled bids suggests further strength might be seen on Tuesday. The average soybean meal price for January was $299.25 per ton. This was a decline of $12.68 from December and a decline of $17.72 per ton from a year ago. The income over feed was $7.81 and the lowest since August 2023. The payment for those who chose the $9.50 level is $1.69 per cwt.

AVERAGE CLASS III PRICES:

3 Month:	$16.12
6 Month:	$17.06
9 Month:	$17.49
12 Month:	$17.54

CHEESE:

Cheese prices are moving somewhat in line with the current fundamentals of strong milk production, and the market moving toward the beginning of the spring flush. Cheese production will increase as more milk becomes available. It will be up to demand to utilize the increased cheese supply to meet the current prices the futures market shows. The hope is that the demand will improve sufficiently to utilize increased supplies.

BUTTER:

The jump in the spot butter price moved it to the highest level since Aug. 26, 2026. There were 15 unfiled bids remaining at the close, suggesting further strength on Tuesday. However, buyers may not be willing to push the price much higher at this time as the current supplies of butter are not tight. Continued strength may slow down international demand.

OUTSIDE MARKETS SUMMARY:

May corn closed down 2.75 cents per bushel at $4.4575, May soybeans closed down 6.75 cents at $11.6400, and May soybean meal closed down $7.60 per ton at $312.90. May Chicago wheat closed down 14.25 cents at $5.7725. April live cattle closed up $0.88 at $233.10. April crude oil is up $4.28 per barrel at $71.30. The Dow Jones Industrial Average is down 73 points at 48,905, with the NASDAQ up 81 points at 22,749.

Monday Midday Dairy Market Summary - Butter Price Explodes

OUTSIDE MARKETS SUMMARY:

CORN:	6 Lower
SOYBEANS:	5 Lower
SOYBEAN MEAL:	$6.70 Lower
LIVE CATTLE:	$0.15 Lower
DOW JONES:	56 Points Lower
NASDAQ:	76 Points Higher
CRUDE OIL:	$4.12 Higher

MIDDAY MARKET UPDATE:

The block cheese price declined 0.75 cent to close at $1.1550 with three loads traded. The barrel price declined a penny to close at $1.55 with no loads traded. The dry whey price declined 0.50 cent to close at 62.75 with one load traded. Class III futures are mixed with futures ranging from 10 cents lower to 5 cents higher. The butter price exploded higher, jumping 26.50 cents, closing at $2.1050 with 15 loads traded. Even with the price increase, 15 unfilled bids and one uncovered offer remained at the close. This is the largest single-day price increase since June 4, 2020. Grade A nonfat dry milk declined 4.00 cents to close at $1.6700. This reduced the impact of the strength of butter. Class IV futures are 4 cents lower to 35 cents higher. Butter futures are 0.80 cent lower to 4.00 cents higher. Dry whey futures are 0.50-1.00 cents lower. Cheese futures are 0.80 cent lower to 0.90 cent higher.

Monday Morning Dairy Market Update - Traders Begin Week With Caution

OPENING CALLS:

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

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	1 to 2 Higher
Soybean Futures:	3 to 4 Lower
Soybean Meal Futures:	$4 to $5 Lower
Wheat Futures:	Mixed

MILK:

Trading volume may be light ahead of spot trading, as the weakness in the spot market on Friday casts a bit of negativity in the market to begin the week. There is some feeling the recent strength in spot prices may have run its course as prices have corrected sufficiently to be in line with supply and demand. Milk production is improving seasonally in many areas, with the market not far from the beginning of the spring flush period. The improved outlook for milk prices will result in a continued push for higher milk production and increased cow numbers. Demand will need to increase to keep pace with increased production, or the supply could exceed demand. The average soybean meal price should be released by the FSA this morning, providing the price to determine income over feed for January.

CHEESE:

The weakness in block cheese on Friday may have indicated buyers have solidified the potential that they have reached a threshold. The weakness may move buyers to the sidelines to see if sellers will be aggressive. It is also possible buyers have purchased what they need for the time being.

BUTTER:

It is difficult to determine if butter has reached a threshold. Significantly lower inventory than a year ago is supportive, but strong butter production and higher milk supplies will keep butter output strong. The price may find a sideways trading range for the near term.