Market News

Milk futures higher, cash dairy mostly lower

In Class III trade at the Chicago Mercantile Exchange, milk futures were supported by follow through technical buying, solid demand expectations, and lower USDA milk production estimates. December was up $.03 at $17.10, January was $.15 higher at $16.68, February was up $.20 at $16.88, and March was $.28 higher at $17.01.

Cash cheese blocks were down $.0125 at $1.71. There were two trades, one at $1.71 and one at $1.7175. The last uncovered offer was for one load at $1.71. Barrels held at $1.5775. There was one load sold at $1.5775.

Butter was $.005 lower at $2.065. The last uncovered offer was for one load at $2.065.

Nonfat dry milk was down $.01 at $.9725. There were three loads sold at $.9725, along with one at $.975. The last uncovered offer was for one load at $.975.

The USDA says butter churning continues to be active across the U.S. as processors wind down holiday related production. Retail demand for print butter is good, but expected to slow. Bulk butter stocks are down and some manufacturers are expected to switch from print production to bulk soon.

Cheese production is active with processors largely able to keep up with what the USDA says are adequate milk supplies. Spot availability in the Midwest is limited and retail orders are holding at high levels. Demand around the U.S. is expected to decline after the end of the year holidays. Fresh cheese block supplies are good, while barrel and aged cheese inventories are long.

Fluid milk production is steady in the Eastern half of the nation, mixed in the Western half, depending on weather. Production in the Central region is called seasonally strong. Bottling demand is mixed, depending on school schedules. Class II and Class III manufacturers are pulling good volumes to meet holiday shipment deadlines and overall, milk intakes are meeting production needs. Cream supplies are also meeting demand, with supplies expected to become more available after the holidays.

At the retail level, conventional dairy ads were down 26% on the week and organic dropped 40%. The price spread for organic and conventional half gallons of milk is $2.00, in favor of organic.