It was a rough day for dairy producer margins, as milk prices came under pressure while grain prices rallied. Block cheese started the week at a two-month high of $1.9400, but closed today at the lowest price since mid-December. As a result, Class III futures came under pressure, with February slipping to $20.27 per hundredweight, down 65 cents. Meanwhile, USDA cut corn yield in the latest WASDE report, coming in well below pre-report estimates and sending March corn futures to $4.7050 per bushel.
Today’s Highlights
- Some support melted away from the spot block market, with prices tumbling to $1.8200 per pound, $0.0775 lower. Barrels also slipped, shedding two cents to close at $1.8500 per pound. Six lots of blocks and two of barrels changed hands. Spot butter, NDM and dry whey were all unchanged.
- USDA’s January World Agricultural Supply and Demand Estimates report was bullish, particularly for corn, which saw yields tumble to 179.3 bushels per acre, below predictions. Ending stocks also dropped sharply to 1.540 billion bushels, down from 1.738 billion in December and well below expectations for 1.675 billion. Soybeans were also lower at 380.0 million bushels compared to 470.0 million the previous month and the consensus call for 457.0 million. Nearby corn and soybean futures reacted by shooting higher.
- The US labor market was stronger than expected in December. Employers added 256,000 jobs compared to +212,000 in November and predictions for +157,000. The unemployment rate dipped to 4.1%, down from 4.2% the month before.
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