Market Reports

Milk production growth was strong across most of the United States in December, with the West and the Midwest posting particularly convincing figures. A dramatic expansion in the national dairy herd drove much of the increase.

Even with a short week, there was no lack of action in the dairy markets. However, the market took the news poorly with most dairy commodities moving decisively downward.

After the enthusiasm ignited by last week’s USDA announcement, most commodities struggled to keep the momentum going. The butter and cheese markets both finished the week on a softer note while dry products, especially whey, fared somewhat better.

Monday’s announcement that the USDA is extending its Farmers to Families Food Box Program spurred dairy commodity prices upward, with all products seeing gains during Tuesday’s spot session.

There is no word yet on when USDA will begin spending its allocations, which makes it difficult to assess the repercussions for the dairy markets. The dairy funding could make a big splash if it is spent in a short time, or slowly ripple through the markets if spent steadily throughout the next year.

A setback is possible, but it’s impossible to predict the timing or magnitude of a retreat from the highs. Seasoned traders warn “Don’t fight the trend.”