Class III milk futures were off to a hot start in the first full week of the New Year. Bidders were the aggressors in cheese on Monday. Class III milk, which was 20 cents higher in the early trade, extended its gains for February through April. All three months printed new contract highs, while May pulled even with its contract high of $19.50 per hundredweight. Traders and hedgers are mulling how far into new contract highs the market wants to push.
CME cheese markets started the week with a jump higher. Barrels climbed to $1.8750 per pound, adding 4.5 cents to reach a price last seen in October. Spot blocks advanced to $1.9400 per pound, two cents higher. Volume traded: four lots of blocks and one of barrels. Spot butter also rose, settling at $2.5700 per pound, up $0.0175, with seven loads exchanged. While NDM ticked up just a quarter cent to $1.3700 per pound, volume trading was heavy at 11 lots.
Nearby Class III futures leapt after the rise in spot cheese prices. The February contract closed at $21.12 per hundredweight, tacking on 55 cents. “All cheese” futures also ticked higher, with the February contract reaching $1.9740 per pound, adding 5.5 cents.
USDA’s November Dairy Products report showed combined NDM+SMP production totaled 167.2 million pounds. While that was up 0.5% (+837,000 pounds) on the month, it was down 10.9% (-20.4 million pounds) versus 2023, likely a result of ongoing HPAI in California. Cheese output also declined, with total cheese production reaching 1.151 billion pounds, down 6.1% (-75.1 million pounds) month-over-month and -1.7% (-19.5 million pounds) on the year.
Source: Dairy Herd Management
