Class III Milk Red Fifth Week in a Row

Since peaking in November at $21.04, the January 2023 class III milk futures contract has fallen $1.80 over the past few weeks. Over that stretch, the market has closed red five weeks in a row. Pressure for dairy stems from a shaky spot cheese trade, consistently lower powder prices, and a softening corn trade. 2023 class III contracts still remain at elevated levels, in a range between $19.10 and $20.59, but that range has fallen $1 to $2 in the past couple months. The market will see a busy week of new data next week and the oversold nature of the market could create a turnaround on positive news. There is a US milk production report on Monday, a Global Dairy Trade auction on Tuesday, and a US cold storage report on Thursday. The milk production report from October had US production up 1.40% year-over-year and cow numbers up 42,000 head from a year ago. The market will watch to see how cow numbers look, because since May cow numbers have been mostly flat. The Global Dairy  Trade will be watched closely with the GDT in the midst of a two-event upswing. The market will watch to see if buyers will continue to support higher global dairy prices.

• Fundamental reports next week: Monday- Milk Production, Tuesday- GDT auction, Thursday- Cold Storage, Friday- Cattle On Feed
• Dairy cow culling, compared to last year, down 4.6% as of December 3rd
• US grocery sales are well ahead of numbers from the last 10 years, cheese demand remains steady, curd demand is lower, butter demand is lower in the retail and food service markets
• Grains were mixed on the week, beans and bean meal were moderately lower, corn and wheat futures slightly up