Tuesday Midday Dairy Market Summary - Cheese Prices Jump

Block cheese price increased 9.75 cents, closing at $1.6750 with 15 loads traded. There were 3 unfilled bids remaining at the close. Price initially moved to $1.6875 before slipping back. Barrel cheese price jumped 15.25 cents, closing at $1.6250 with just one load traded. Price initially moved to $1.66 before selling moved the market off its high. There were 2 offers remaining at the close of spot trading. It seems buyers of the physical product were just as excited as traders of Class III futures. Futures were locked limit up in January through May contracts prior to spot trading and then added June to the mix after spot trading. Double-digit gains are seen in all contracts that have traded, except front-month December as that month is basically priced. Butter price increased 4.50 cents, closing at $1.52 with 2 loads traded. Butter was somewhat similar to cheese in that price slipped back from its high during spot trading. Grade A nonfat dry milk slipped 0.25 cent, closing at $1.1475 with 2 loads traded. Dry whey price increased 1.25 cents, closing at 46.75 with no loads traded. Class IV futures are 11 to 20 cents higher. Butter futures are 0.45 to 3.22 cents higher. Dry whey futures are 1.15 to 1.77 cents higher. USDA will release the November Cold Storage report Tuesday afternoon.

Tuesday Morning Dairy Market Update - Markets Excited Over Stimulus

 Opening Calls:

Class III Milk Futures:	20 to 50 Higher
Class IV Milk Futures:	5 to 10 Higher
Butter Futures:	2 to 3 Higher

Outside Market Opening Calls:

Corn Futures:	Mixed
Soybean Futures:	1 to 3 Lower
Soybean Meal Futures:	$1 to $3 Lower
Wheat Futures:	5 to 10 Lower

Milk:

Class III milk futures are exhibiting a similar market pattern as Sunday night except buying has been more aggressive this time. Traders are bulled up over the potential of significant demand for dairy products as a result of $13 billion being appropriated for food assistance in the stimulus bill. It is unclear how this will break down and whether there will be another Farmers to Families Food Box program. It certainly was effective in 2020, increasing demand for dairy products and moving prices higher. Traders are looking over their shoulders as to what took place previously and are jumping to get ahead of it this time. If a similar impact will be made in the market, we may see the continuation of large negative PPDs as cheese prices could again run away from butter and powder prices. It is too early to tell what the impact will be. However, this will create volatility and increase price premiums in futures contracts in anticipation of higher demand. There have not been any solicitations put out by USDA for dairy product purchases nor has there even been any mention of it by USDA as of yet and not likely through the end of the year.

Cheese:

It will be up to cheese prices to support the exuberance in milk futures. If cheese remains in the pattern it has already established, the upside to milk futures will be limited. There really has not been any change to current fundamentals as holiday demand has been filled with buyers looking ahead to first quarter demand and rebuilding aging programs.

Butter:

Price is expected to continue to struggle through the end of the year remaining in a sideways range. USDA will release the November Cold Storage report Tuesday, which may keep any price increase short-lived. Inventory is expected to show a decline from October, but a substantial increase from a year ago. Demand from the food service industry will remain substantially lower for the foreseeable future.

Monday Closing Dairy Market Update - Stimulus Bill Contains Some Agricultural Assistance

 MILK

There has been quite a bit of volatility is the market Monday, but futures have settled down into the close. Initial strength overnight was likely due to the stimulus bill and the potential for more benefit to the dairy industry. However, that ran its course overnight. We do now have a better idea of what is contained in the bill, and there are some benefits to farmers. There is $13 billion earmarked for food assistance, which will help agriculture. There is $13 billion for direct payments, purchases and loans to farmers and ranchers. There is $5 billion for supplemental payments of $20 per acre for row crops and up to $3 billion in direct payments to livestock and dairy farmers that were forced to euthanize livestock and poultry due to slaughterhouse closures. It is difficult to determine how much impact the money earmarked for food assistance will have on dairy demand and whether this will be over and above some of which is already being done. The indication of this will be how aggressive buyers of dairy products will be early next year. Anything will help to provide greater demand and support prices. So far, milk futures have not reacted much since more of what the bill contains has been released.

AVERAGE CLASS III PRICES

3 Month:	$15.92
6 Month:	$16.37
9 Month:	$16.65
12 Month:	$16.85

CHEESE

Barrel cheese tried to move higher during spot trading, but could not hold price in positive territory. Demand has remained fairly stable, but some slowing of orders has been noted from some retail outlets. This stands to reason at this time of year as many retail outlets will now wait to see how much product will move over the holidays before reordering. Pizza demand remains strong as it seems to be one of the most popular carryout items. It will be interesting to see how much or if the money appropriated for food assistance in the stimulus bill will affect dairy.

BUTTER

Butter output remains strong due to heavy cream supply, and there is no sign of slowing by manufacturers. This, along with reduced food service orders, has made it difficult for plants to reduce inventory into the end of the year. USDA will release the November Cold Storage report Tuesday, which should show a reduction of inventory from October, but may show a growth of stocks from November 2019.

OUTSIDE MARKETS SUMMARY

March corn gained 2.50 cents, closing at $4.40. January soybeans jumped 23.25 cents, closing at $12.4325, with January soybean meal up $6.80 per ton, closing at $412.30. March wheat gained 3 cents, closing at $6.1125. December live cattle gained $0.12, ending at $110.60. February crude oil fell $1.36 per barrel, closing at $47.74. The Dow gained 37 points, closing at 30,216, while the NASDAQ declined 13 points, closing at 12,743.