By  E. W. Lang

The United States and the Peoples Republic of China each announced a Phase 1 agreement regarding international trade with separate, different, less than specific details on Thursday. On Friday, nearby markets responded to the agreement with modest increases in most commodities

Corn up three cents per bushel, soybeans up eight cents, soybean meal up $2.50 per ton. Steers up $2.72 per cwt., hogs up 60 cents. Crude oil up 72 cents per barrel, scrap iron up $3 per ton and gold up 9 cents per ounce.

January Class III Milk Futures, however, lost 24 cents to close at $18.00 per cwt., a price last seen on November 19, and off the December 3 contract high of $18.98.

Each participant in the Phase 1 agreement was adamant that they were not bullied into submission by the other side.

Stated details include that China will promise ON PAPER that they will buy more farm products, this in return for the United States not imposing additional tariffs, scheduled for Sunday. The U.S. says that the current 25% tariff on Chinese imports will remain, but that the 15% levies on other goods will be cut in half. China says the U.S. will remove its tariffs in stages, and they declined to disclose the scale of their promise to purchase U.S. farm products.

Conventional wisdom is that this Phase 1 agreement should deliver U.S-China trade activity back to the level of five years ago, and a Phase 2 agreement can be expected in 10 years.

Seriously, I'm not making this stuff up. There may be more clarity by next week. Or there may be less clarity by next week. Or by next week there may no longer be an agreement. The one detail certain is that the U.S. will not be violating the Sabbath by imposing new tariffs on a Sunday.

Block cheese opened Monday at $1.97 per lb. Barrels were $2.08 and the blood letting began at a weekly rate (25%) never before seen in cheese markets.

Monday's trade saw barrels lose 15 cents, followed by 13 cents on Tuesday. But it doesn't stop there. Wednesday saw nine cents off of barrels and three off of blocks. Then 10 more off barrels and five off blocks on Thursday. Six more cents Friday and barrel cheddar ended the week at $1.695 per lb., a loss of 53 cents in five trading days. 40 lb. blocks closed out the week at $1.80 per lb., for a loss of 17 cents (8.6%).

For reference, spot price on barrels topped out on Nov. 6 at $2.39 and blocks were $2.17 on Oct. 31. If it's any consolation, barrels were $1.29 and blocks were $1.39 one year ago.

Class III Milk Futures for next year average $17.40 per cwt., whilst Class IV Futures average $17.88 per cwt. Those prices are minus nine and minus six cents for the week, but still 10 and 20 cents higher than they were on Nov. 1 when spot cheese topped out....Key point there, as Class III for the last five years has averaged $15.66 per cwt.

Hay at auction in Dyersville, Iowa was called "up $20 to $40 per ton," with a top of $330 for large squares of good quality alfalfa. No premium or supreme alfalfa was in the offering this week.

Expensive alfalfa, higher corn and soy prices, and lower milk prices indicate that monthly government dairy subsidies may be triggered next year. If price trends continue, and revenue over feed cost goes under $9.50 per cwt, milk producers enrolled in the 2020 Dairy Margin Coverage program will be eligible for compensation. Dairy farmers got DMC payments for several months earlier this year.

The sign-up deadline is Friday, December 20, and enrollment cost is low enough to warrant serious consideration, based on recent milk and feed prices. USDA has a tool that can help assess risk when producers decide on 2020 DMC sign up.