Market Reports

Though it will take some time for the impacts of the weather to become fully appreciated, a reduction in milk production and increase in culling is likely in the coming weeks.

Inventories for most dairy products remain heavier than typical for this time of year. Nevertheless, the situation is evolving and tighter markets could be on the horizon.

Prices fluctuate as new market information collides with the realities of supply and demand. Reports indicate that milk production continues to exceed prior year levels and is growing seasonally as spring approaches.

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.